Williamson has been replaced as the head of the Ministry of Defence by international development secretary Penny Mordant.
Mordaunt will be the first woman ever to hold the position, and her hold role be taken over by Rory Stewart.
The Tory MP for South Staffordshire was booted out following an inquiry into the leak of information from last week's National Security Council.
Downing Street said that May asked Mr Williamson to leave the Government having "lost confidence in his ability to serve".
The inquiry by Cabinet Secretary Sir Mark Sedwill was launched after information from secret discussions about Chinese telecoms firm Huawei's involvement in the development of the UK's 5G mobile network was printed in the Daily Telegraph.
Williamson denies he was the source of the leak – and "swore on his children's lives" that it was neither him or his staff, reports Sky News.
SACKED: Gavin Williamson has been forced out of the government in disgrace (Pic: AFP)
“No other, credible version of events to explain this leak has been identified”
Williamson was listed in the Telegraph as being among a small group of ministers whose warnings about Huawei's involvement were overruled by the Prime Minister.
May is reported to have given the green light for Huawei to provide "non-core" elements of the UK network.
In a statement, a Downing Street spokesman said: "The Prime Minister has this evening asked Gavin Williamson to leave the Government, having lost confidence in his ability to serve in the role of Defence Secretary and as a member of her Cabinet.
"The Prime Minister's decision has been informed by his conduct surrounding an investigation into the circumstances of the unauthorised disclosure of information from a meeting of the National Security Council.
"The Prime Minister thanks all members of the National Security Council for their full cooperation and candour during the investigation and considers the matter closed."
FIRST EVER: Penny Mordaunt has become the first woman to head up the MoD (Pic: GETTY)
In a meeting with Mr Williamson on Wednesday evening, Mrs May confronted him with information which she said provided "compelling evidence" that he was responsible for the unauthorised disclosure.
And in a letter confirming his dismissal, she told him: "No other, credible version of events to explain this leak has been identified."
Mrs May said that the leak from the April 23 meeting was "an extremely serious matter and a deeply disappointing one".
While leaks from Cabinet meetings are relatively frequent, it is unprecedented for private conversations from a forum where the most senior ministers are briefed by heads of the security and intelligence agencies to reach the public.
Mrs May said it was "vital for the operation of good government and for the UK's national interest" for NSC members to be able to have "frank and detailed discussions in full confidence that the advice and analysis provided is not discussed or divulged beyond that trusted environment".
DEFENCE BOSS: Gavin Williamson swore on his 'children' he wasn't behind the leak (Pic: PA) Related Articles
DISGRACED: Gavin Williamson refused to resign over the inquiry so was sacked (Pic: PA)
Informing Mr Williamson of his dismissal, Mrs May said she was "concerned" at the manner in which he had engaged with Sir Mark's inquiry.
"It has been conducted fairly, with the full co-operation of other NSC attendees," she wrote.
"They have all answered questions, engaged properly, provided as much information as possible to assist with the investigation, and encouraged their staff to do the same. Your conduct has not been of the same standard as others'.
"In our meeting this evening, I put to you the latest information from the investigation, which provides compelling evidence suggesting your responsibility for the unauthorised disclosure. No other, credible version of events to explain this leak has been identified."
ALLIES: Gavin Williamson had been an appointment by Theresa May (Pic: REUTERS)
In a letter in response to his sacking, Williamson said: "I am sorry that that you feel recent leaks from the NSC originated in my Department.
"I emphatically believe this was not the case. I strenuously deny that I was involved in this leak and I am confident that a thorough and formal inquiry would have vindicated my position.
"I have always trusted my civil servants, military advisers and staff. I believe the assurances they have given to me.&Read More – Source[contf] [contfnew]