Downing Street said the PM had “lost confidence in his ability to serve” and Penny Mordaunt will take on the role.
The inquiry followed reports over a plan to allow Huawei limited access to help build the UK’s new 5G network.
Mr Williamson, who has been defence secretary since 2017, continues to deny leaking the information.
In a meeting with Mr Williamson on Wednesday evening, Theresa May told him she had information that provided “compelling evidence” that he was responsible for the unauthorised disclosure.
In a letter confirming his dismissal, she said: “No other, credible version of events to explain this leak has been identified.”
BBC political editor Laura Kuenssberg said Mr Williamson was “sticking to his story that it was nothing to do with him”.
She said the leak from the security council was “unusual” and “clearly she (the PM) felt that she had to take action in this case”.
But security correspondent Frank Gardner said the BBC had been told that “more than one concerning issue” had been uncovered regarding Mr Williamson during the leak inquiry and not just the Huawei conversation.
The inquiry into the National Security Council leak began after a Daily Telegraph report on the Huawei decision and subsequent warnings within cabinet about possible risks to national security over a deal with Huawei.
The National Security Council (NSC) is made up of senior cabinet ministers and its weekly meetings are chaired by the prime minister, with other ministers, officials and senior figures from the armed forces and intelligence agencies invited when needed.
It is a forum where secret intelligence can be shared by GCHQ, MI6 and MI5 with ministers, all of whom have signed the Official Secrets Act.
There has been no formal confirmation of Huawei’s role in the 5G network and No 10 said a final decision would be made at the end of spring.
— Gavin Williamson (@GavinWilliamson) May 1, 2019
Huawei has denied there is any risk of spying or sabotage, or that it is controlled by the Chinese government.
Mrs May said the leak from the meeting on 23 April was “an extremely serious matter and a deeply disappointing one”. Source bbc