The online giant has confirmed the former boss has left the company and the board with immediate effect.
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Thompson will be replaced in the interim by Ron Levinsohn, who runs the company's global media department.
Thompson's position has been in question all week over the presence of a computer science degree within his biography, which he had not earned.
Sorry not enough
The now ex-CEO had apologised for the negative impact the row was having on the company, but it was not enough to save his job.
The company also announced a settlement with the man who exposed Thompson's faux-pas, "activist shareholder" Daniel Loeb is also approaching.
Thompson's demise comes just a few months after he replaced Carol Bartz as the head of the internet giant.