President Jacob Zuma's replacement of Pravin Gordhan comes as part of a cabinet shuffle that changes 10 of the country's 35 ministers.
The new ministers will be sworn in later Friday.
Pressure has been growing on Zuma to step down after he recalled Gordhan, who has a strong reputation as a bulwark against corruption, from a trade trip in London earlier this week.
The recall caused South Africa's rand to lose nearly five percent, another blow to Africa's most industrialized economy that grew just 0.5 percent last year.
Many South Africans had viewed Gordhan as a responsible steward of an economy facing possible credit rating downgrades.
Gordhan has been replaced by Malusi Gigaba, a former home affairs minister, a statement from the president's office said.
South Africa's two main opposition parties took aim at the president on Thursday, with one appealing to the highest court to order impeachment proceedings and the other announcing it will launch a vote of no confidence.
On Wednesday, Gordhan inspired a standing ovation at the funeral of one of South Africa's leading anti-apartheid activists as longtime leaders of the ruling African National Congress, the country's former liberation movement, called for Zuma to step down.
But even allies of the ruling party had warned against replacing Gordhan.
The scandal-ridden Zuma in November last year survived an attempt by senior party members to oust him as president.
Earlier last year, South Africa's highest court found that Zuma had violated his oath of office by refusing to abide by an order to pay back some of the millions of dollars in public money spent on upgrading his rural home.
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