Published: 2018-03-13 18:58:06 BdST
Trump announced the Cabinet shakeup on Twitter and said he had tapped the CIA's deputy director, Gina Haspel, to replace Pompeo at the intelligence agency.
Tillerson's departure represents the biggest staff change in the Trump Cabinet so far and caps months of tensions between the Republican president and the 65-year-old former Exxon Mobil chief executive.
A senior White House official said Trump asked Tillerson to step down on Friday but did want not to announce it while he was on a trip to Africa.
The official said Trump works well with Pompeo, a former congressman from Kansas who is seen as a loyalist within the administration, and wanted him in place before the US president's planned talks with North Korean leader Kim Jong Un and trade negotiations.
US stock index futures pared their gains and the dollar also trimmed gains versus the yen while extending losses versus the euro amid the news.
Trump and Tillerson, who had no diplomatic or political experience before becoming secretary of state, have diverged on policy numerous times, including over North Korea and Russia. On Monday, Tillerson sharply criticized Russia over the poisonings in England of a former spy and his daughter, directly blaming Moscow after White House press secretary Sarah Sanders stopped short of doing so.
Tillerson also appeared out of the loop last week when Trump announced he would meet with North Korea's leader and become the first sitting U.S. president to do so.
"Mike Pompeo, Director of the CIA, will become our new Secretary of State. He will do a fantastic job! Thank you to Rex Tillerson for his service! Gina Haspel will become the new Director of the CIA, and the first woman so chosen. Congratulations to all!" Trump said on Twitter.