A court has ruled Ms Yingluck has breached the constitution and ordered her to step down.
Anti-government protesters are back on Thai streets celebrating the removal of Yingluck Shinawatra from office.
Jubilant anti-government demonstrators blew whistles outside the court to mark her dismissal.
It's been a key demand of their movement, which is seeking to curb the influence of Ms Yingluck's billionaire brother Thaksin Shinawatra.
Thailand's Constitutional Court ruled unanimously that Ms Yingluck had acted illegally by transferring a top security official in 2011.
Ms Yingluck had come under intense scrutiny by opposition forces, who argued the transfer was made to benefit her political party and family.
This protester praised the constitutional court for its ruling but says their fight isn't over yet: "I'm not 100 per cent happy as I was hoping the whole government would be out of power."
The court ruling plunges Thailand deeper into a prolonged political crisis.
Nine cabinet ministers who endorsed the decision to transfer Thawil Pliensri were also stripped of their status.
The current commerce minister - Niwattumrong Boonsongpaisan - has been elevated to caretaker Prime Minister.
The Constitutional Court has played a key role in recent years in deposing governments linked to the powerful Shinawatra family.
The kingdom has been bedevilled by a bitter political schism since 2006 when an army coup deposed former telecommunications magnate Thaksin as Prime Minister.
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After the ruling was handed down, Ms Yingluck offered this defence: "I insist that we have used honesty to administrate the country and we have never done anything that conveys any dishonest actions as accused."
Ms Yingluck's so-called Red Shirt supporters are rallying behind their party.
The Red Shirts are still on Bangkok's streets and are threatening protests to defend Ms Yingluck, raising fears of clashes.
Verapat Pariyawong is a legal advisor and Thai political commentator.
He was also formerly special counsel to the Thai deputy Prime Minister under the current government.
Mr Pariyawong says Ms Yingluck's presence in government helped keep the Red Shirts in check.
"But now with Yingluck gone I'm afraid that's going to be a bit more difficult especially with the hot-headedness of her brother," he said.
"If they decide to mobilise the Red Shirts there could be a third hand played that leads to some violence on the streets and perhaps that might put more pressure on the military to intervene, something we've seen countlessly in Thailand in the past and that could lead us back to the situation in 2008, that is we had the head of the government removed, we had a new party and then we had the massacre of the protesters in the streets and that is something that I and many Thai people don't want to see again."
Mr Pariyawong says opposition forces shouldn't be too pleased about Ms Yingluck's dismissal.
He says she was one of few people capable of resisting the will of her powerful brother, Thaksin - the subject of much of the anti-government anger.
Mr Pariyawong says all eyes are now on whether the government can push through general elections slated for July 20.
"If what remains of the current caretaker government decides to follow the same strategy, that is to outplay and outlast the opposition then the game could get very interesting.
"They could try to push for the election for July, they could try to seek sympathy that now Yingluck has removed - 'Let's get the country together, let's go ahead with the election. The problem is the opposition leader will not let that succeed easily, so we have to see what happens next."
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