On Friday morning Philippe presented his resignation and that of his government, which was accepted by the President Emmanuel Macron, the Elysée Palace said, AFP reported.
No reason was given in the short statement, but a cabinet shuffle had been widely expected after Macron vowed to chart a new course for the last two years of his term.
The government will continue to handle "day-to-day matters" until a new government is named, the presidency said.
Philippe's successor has not yet been named.
Philippe's popularity among the French public had been rising in recent weeks in contrast to that of Macron.
A recent poll suggested 57 percent of the French wanted Philippe to stay on as PM.
On Sunday he won re-election to his mayoral seat in the Northern port town of Le Havre.
Macron told the regional press on Thursday that la rentrée, meaning the return to work in September after the summer holidays "will be extremely difficult".
"We need to be prepared," Macron said.
Macron said that his relationship with Philippe was "historic" and that the PM had done a "remarkable job" as leader of the government.
Macron said there would a "new team" would lead the "reconstruction" of the country, but did not say who would be part of it.
Macron's Republic on the Move (LREM) party failed to notch up any significant victory in the second round of Sunday's municipal elections that had been postponed for over three months due to the coronavirus pandemic.