Press Secretary Sarah Huckabee Sanders confirmed that Friday was his last day.
His exit follows a review of his position by White House Chief of Staff John Kelly.
Mr Bannon, a right-wing nationalist and former head of Breitbart.com, helped shape the "America First" message of Mr Trump's election campaign.
But critics had accused the 63-year-old of harbouring anti-Semitic and white supremacist views.
Mr Bannon is known to have competed for influence in the West Wing against more moderate factions, including members of the Trump family.
