The announcement was made Monday afternoon by Information Minister Simon Khaya Moyo.
His removal makes it more likely that President Robert Mugabe's wife Grace will follow in her husband's footsteps as leader of Zimbabwe.
"His Excellency the President Of Zimbabwe...has exercised his powers to relieve Hon VP Mnangagwa of his position as VP of the Republic Of Zimbabwe with immediate effect".
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"It had become evident that his conduct in the discharge of his duties had become inconsistent with his official responsibilities", Moyo said.
Grace reportedly declared over the weekend that Mnangagwa should be gone from both the government and Zanu-PF before the party's extraordinary congress in December.
President Mugabe declared at his youth interface rally in Bulawayo on Saturday that he was going to remove his deputy the next day. Grace made global headlines in August when a South African model said the Zimbabwean first lady had whipped her with an electric cable in a Johannesburg hotel suite. The fight over the future control of ZANU-PF has overshadowed an economic crisis marked by chronic shortages of cash and spiralling prices of goods that has raised fears of a return to hyperinflation.
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Grace has said she was ready to become deputy to her husband.
Mugabe stripped him of the justice ministry recently and criticised Mnangagwa's support for repeal of the death penalty.
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"In 1980 this person called Mnangagwa wanted to stage a coup".