The party replaced Bo, 62, with Vice Premier Zhang Dejiang, the official state-run Xinhua news agency reported.
The decision was taken by the party's Central Committee, Xinhua reported, saying Bo will no longer serve as secretary, standing committee member or member of the party's Chongqing municipal committee.
The action comes a day after Chinese Premier Wen Jiabao, speaking at a news conference in Beijing, said Chongqing authorities must "seriously" draw lessons from the Wang Lijun incident as the central authorities had taken it "very seriously."
The incident relates to Wang, a former police chief, going to the U.S. Consulate in Chengdu last month. Xinhua, quoting the Chinese Foreign Ministry, said Wang stayed at the consulate for one day on Feb. 9.
China has ordered an investigation into the Wang incident.
CNN reported it was never made clear what transpired in the U.S. Consulate, which only said Wang's visit was a scheduled one and that he left the premises on his own.
Bo took over the party post in Chongqing in 2007 after serving as governor of Liaoning and minister of commerce.
The Hindu newspaper said prior to his removal, Bo had emerged as a figure in the next generation of communist leadership that will come into office later this year. He might have even become part of the nine-member Politburo Standing Committee, which effectively runs the country.
In announcing the decision about Bo, Li Yuanchao, head of the organization department of the party's Central Committee, said the committee had made "discreet consideration" based on current circumstances and the overall situation, Xinhua reported.
Zhang, 65, became a member of the Political Bureau in 2002 and began serving as vice premier of the State Council, China's Cabinet, in 2008.
Bo also was seen as promoting a "red revival" campaign, the Washington Post reported.
Commenting on his firing, University of Alberta police science Prof. Wenran Jiang told CNN it was "not surprising, given Wen Jiabao's tone."