The congressman was ousted as the head of the Republican majority in the lower chamber of Congress by a vote of 216 to 210.After he reached an agreement with Senate Democrats to fund government agencies, hardliners in his party voted against him.
The management of the House Republican majority lacks an obvious successor.
To prevent a second potential government shutdown, Congress has just under 40 days to reach a resolution.
Republican Matt Gaetz of Florida, a supporter of Donald Trump, filed a motion to vacate on Monday night in order to remove Mr. McCarthy from his position.
In the midst of talks to avert a partial government shutdown at the weekend, he accused the Speaker of reaching a covert agreement with the White House to preserve financing for Ukraine. McCarthy disputes it.
Following his dismissal on Tuesday night, Mr. McCarthy informed his colleagues in a private meeting that he had no intention of running for Speaker again.
Later, he turned his focus to Mr. Gaetz, his political foe, and accused him of seeking publicity.
At a press conference, Mr. McCarthy stated, "You know it was personal, it had nothing to do with money."
He claimed that Mr. Gaetz's fundraising emails during the argument were "not befitting of a member of Congress."
McCarthy stated that the hardliners who drove him out "are not conservatives."
After a grueling 15 rounds of voting in the chamber because Mr. Gaetz and other right-wingers refused to endorse him, he finally was elected Speaker in January.
210 Republican lawmakers backed Mr. McCarthy, but eight joined all the Democrats in voting against him on Tuesday.
A moderate Republican named Nancy Mace cast a surprise no vote for Senator McCarthy.
"I am looking for a Speaker who will tell the truth to the American people, who will be honest and trustworthy with Congress, with both parties," the South Carolina politician added afterward.
In a letter to his colleagues, Democratic House Leader Hakeem Jeffries declared he would not cast the votes required to save Mr. McCarthy.
Left-leaning Democratic congresswoman Pramila Jayapal from the US state of Washington told reporters prior to the vote: "Let them wallow in their pigsty of stupidity."
Members of the crowded chamber, which the Republicans control by a slim margin of 221-212, were largely silent as they awaited the outcome of the roll call vote.
To audible gasps, Republican Steve Womack of Arkansas proclaimed, "The office of Speaker of the House is hereby declared empty."
The party should be "fighting the Radical Left Democrats" instead of each other, according to a social media statement made earlier in the day by former US President Donald Trump.
Patrick McHenry, a Republican from North Carolina who backed Mr. McCarthy, is now the Speaker pro tempore, or acting Speaker. The House was put into recess for a week by him.
It is uncertain if he will have all of the office's authority or just administrative authority and the authority to oversee a new election.Although a vote to elect a new Speaker is scheduled for October 11th, the rules do not specify how long a person may serve in an interim capacity.
Republicans Tom Emmer of Minnesota and Steve Scalise of Louisiana have both been suggested as prospective candidates to succeed Mr. McCarthy, but neither has shown any interest in the position.
President Joe Biden is hopeful the House would swiftly pick a new Speaker, according to the White House press secretary Karine Jean-Pierre, who noted that the "challenges facing our nation won't wait."
Paul Ryan and John Boehner, the past two Republican Speakers, both resigned from Congress following ongoing conflicts with their more conservative colleagues.
Only twice in the past century had the so-called motion to vacate been used to remove a Speaker—in 2015 and 2010—but never before had it been successful.
BBC