The Brazilian Democratic Movement Party (PMDB) decided at a leadership meeting that its six remaining ministers in Rousseff's Cabinet and all other party members with government appointments must resign or face ethics proceedings.
Under Brazil's presidential system, Rousseff will continue in office but the break sharply raises the odds she will be impeached by Congress in a matter of months, which would put Vice President Michel Temer, leader of the PMDB, in the presidential seat.
The opposition is pressing to impeach Rousseff for allegedly breaking budget laws. Their efforts gained steam as Brazilians have grown frustrated with the worst recession in decades and a vast corruption scandal reaching the president's inner circle.
Rousseff has denied any wrongdoing and called the impeachment efforts a coup.
The loss of Rousseff's main coalition partner may prompt smaller parties to abandon the government, leaving Brazil's first female president increasingly isolated as the impeachment process nears its first vote as soon as mid-April.
Investors weary of Rousseff's interventionist economic policies and a deepening recession have cheered the prospect of her ouster, boosting Brazil's currency 8 percent this year as the benchmark Bovespa stock index .BVSP rose 19 percent.
