The online giant has confirmed the former boss has left the company and the board with immediate effect.
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.