Gallant has long been at odds with Netanyahu, who, among other things, tried to fire him on one occasion in March 2023 – a decision he was forced to withdraw after widespread protests.
Since the war in Gaza broke out in October, Gallant has criticized Netanyahu's tactics several times.
Netanyahu writes in a statement that trust in Gallant has been eroded over the past few months.
"Against this background, I have today decided to terminate the defense minister's term of office," it says.
Foreign Minister Israel Katz becomes the new defense minister. Gideon Sa'ar, who has long been called Netanyahu's rival but was recently offered a government position without a specific ministerial post, in turn replaces Katz as foreign minister.
In a statement on X, Gallant writes that Israel's security has always been and will always be his life's mission.
Hundreds are reported to have taken to the streets in Tel Aviv to demonstrate against the dismissal. Opposition leader Yair Lapid urges his supporters to go out and protest.