The court's ruling comes after Yingluck and members of her cabinet used their authority to transfer a national security official in order to pave the way for Yingluck's relative to become national police chief.
The judge said in accordance with the constitution of Thailand, the position is declared vacant. He also added that the nine cabinet members, who worked in her office in 2011 when the transfer happened, must step down as well.
Shortly after the verdict, the cabinet members selected Niwatthamrong Boonsongpaisan, the interim commerce minister, as the new caretaker prime minister. In the meantime, Yingluck thanked her supporters and maintained her innocence.
"I want to reiterate I have worked with the intention and devotion to serve the people, as they have trusted me and voted for me," said Yingluck. "I administered the country with honesty and I didn't do anything that is dishonest or in violation of the constitution as accused."
Yingluck's party, the Pheu Thai Party, says the verdict is an attempt to undermine democracy.
"The prime minister has done nothing wrong. But the court ruled against the prime minister. What I am surprised at is the court didn't disqualify the whole Cabinet. This is good," said former Foreign Minister Nappadon Pattama, a supporter of the current government.
Yingluck has been accused of anti-government protesters for being the puppet of her brother, Thaksin Shinawatra, who was deposed in a military coup in 2006. This has led to increased civil unrest in the country, with government opposition claiming the elections in the country were rigged.
The situation worsened with protests and riots in the streets of Bangkok, when Yingluck and the party tried to push through an amnesty bill last November that would have allowed Thaksin to return to Thailand a free man. Thaksin fled the country after his ousting to avoid imprisonment for corruption.
Anti-government groups praised the court's decision to force Yingluck out and called for an unelected council to replace her and her cabinet to enact reforms that would prevent election rigging. The government is worried that in the confusion following the ruling, more protests and violence will erupt with opposition groups.
Nappadon asserts the number one priority must be to gain stability: "We have to prevent any possible clash with our opponents. Otherwise the clash or the violence would be cited as an excuse to stage a military coup or any uncalled-for military intervention."