The move came after Mr Trump repeatedly criticised Mr Sessions for recusing himself from an investigation into Russia’s role in the 2016 presidential race.
Mr Sessions announced his resignation in a letter to Mr Trump, saying the resignation came at “your request”.
The 71-year-old former US senator was informed on Wednesday morning (local time) by White House chief of staff John Kelly in a phone call that it was time to go, an aide who spoke on condition of anonymity told Reuters.
It was the first of what could be a string of high-profile exits as Mr Trump reshapes his team ahead of his own 2020 re-election effort.
POTUS effectively fires AG Sessions pic.twitter.com/XcfHQZSb41
— Jake Tapper (@jaketapper) November 7, 2018
Mr Sessions’ departure was widely expected in the wake of the midterms, which saw Republicans retain their majority in the Senate but lose control of the House of Representatives.
Acting Attorney-General Matthew Whitaker will oversee all matters under the Justice Department’s purview, including the Russia probe that had been supervised by Deputy Attorney-General Rod Rosenstein, a department spokeswoman said on Wednesday.
In a tweet, Mr Trump thanked Mr Sessions for his service, and wished him well.
He said a permanent replacement would be nominated at a later date.
Mr Sessions walked out the Justice Department for the last time on Wednesday evening to applause from more than 150 employees who gathered in a courtyard.
He appeared emotional as he left and said, “Thank you” and “God bless,” before hopping into a waiting car.
He also shook hands with Mr Whitaker, who told Mr Sessions: “It’s been an honour, sir.”
In a statement, Mr Whitaker called Mr Sessions a man of integrity “who has served this nation well” and a “dedicated public servant for over 40 years”.
He also said he was honoured that Mr Trump has confidence in his ability to lead the Justice Department.
‘Blatant attempt’ to end Russia probe
Democrats have criticised the decision to fire Mr Sessions, asserting it was part of a plan that could see the extensive Russia probe wound back.
Senate Minority Leader Chuck Schumer said it was “paramount” that the investigation be protected by President Donald Trump’s new Attorney-General.
Senator Schumer said he found the timing of Mr Sessions’ departure “very suspect.”
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House Democratic leader Nancy Pelosi said she saw Mr Sessions’ sacking as a “blatant attempt” to undermine the probe, which Mr Trump has frequently labelled a “witch-hunt”.
Ms Pelosi called on Mr Whitaker to recuse himself from any involvement in the probe, citing what she called his “record of threats to undermine and weaken” it.
It is impossible to read Attorney General Sessions’ firing as anything other than another blatant attempt by @realDonaldTrump to undermine & end Special Counsel Mueller’s investigation.
— Nancy Pelosi (@NancyPelosi) November 7, 2018
Mr Whitaker once opined about a situation in which Mr Trump could fire Mr Sessions, and then appoint an acting attorney-general who could stifle the funding of Mr Mueller’s probe.
“I could see a scenario where Jeff Sessions is replaced with a recess appointment,” Mr Whitaker told CNN in July last year.
“That attorney-general doesn’t fire Bob Mueller, but he just reduces his budget to so low that his investigation grinds to almost a halt.”
Asked if that would be to dwindle the special counsel’s resources, Mr Whitaker responded, “Right.”
In an op-ed for CNN, Mr Whitaker wrote: “Mueller has come up to a red line in the Russia 2016 election-meddling investigation that he is dangerously close to crossing.”