King Abdullah II replaced Khasawneh, who was in Turkey, with Fayez Tarawneh, 63, who was prime minister and royal court chief in the late 1990s.
The king "asked Fayez Tarawneh to form a new government after the resignation of Khasawneh today," a senior official told AFP.
Khasawneh, 62, an International Court of Justice judge, formed his cabinet in October, becoming the third premier in 2011, saying he had "received guarantees from the king to have full sovereignty as prime minister."
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It was unclear why Khasawneh quit but news reports quoted sources as saying he was unhappy that the king decided to extend parliament's ordinary session until June 25.
"Regardless of how he quit, this showed the sovereignty which the prime minister talked about does not exist in Jordan," said Zaki Bani Rshied, head of the political bureau of the powerful Islamic Action Front.
"It revealed the level of power struggle within the state. Unfortunately, the security services and a siege mentality have won."
Bani Rshied, whose party is the political arm of the country's Muslim Brotherhood, warned that "the coming phase will be full of political uncertainty."
"All that talk about reform that we have been hearing was nothing. It has been proven that there is no will to introduce reforms. The current atmosphere shows that the country is heading towards more failure," he told AFP.
Following his appointment, Khasawneh vowed to fight corruption, and analysts warned at the time that his government could be a last-ditch shot at reform.
"It was a strange decision. It is obvious the state is facing a dilemma," said Mohammed Masri, political analyst at the University of Jordan's Center for Strategic Studies.
"In my opinion, the new prime minister does not have a convincing record to introduce the required reforms at this stage of 'Jordanian spring'. He is not known as an open-minded politician."
Masri said Tarawneh faces a "tremendous challenge."
"He needs to convince people that he can reform. If he fails, the dilemma will become bigger," he told AFP.
Khasawneh won a comfortable vote of confidence for his government from parliament in December after pledging to push ahead with reforms.
But Khasawneh came under sharp criticism for proposing an electoral law that has been seen as a blow to pro-reform movements, including the powerful opposition Islamists.
The long-awaited draft, which was approved by the cabinet earlier this month, scraps a contested one-person-one-vote system and increases a quota for women MPs.
The Islamists and other groups criticised the proposal, mainly for limiting the number of seats allocated to political parties.
Jordan has seen relatively small but persistent Arab Spring-inspired demonstrations almost every week since January 2011, demanding sweeping reforms and a tougher fight against corruption.
But no significant anti-corruption action has been taken so far, while the overall debt reached $21 billion by the end of February.
And officially, unemployment is about 14 percent in the country of nearly 6.5 million people, 70 percent of them under the age of 30. Other estimates, mostly from non-government organisations, put unemployment as high as 30 percent.
