The Times reported Bannon has already returned to the helm of Breitbart.com, the conservative online news outlet he ran before joining Trump's campaign last year.
The departure is another major staff shakeup in three weeks for Trump, who during that time fired former chief of staff Reince Priebus and replaced him with Homeland Security Secretary John Kelly. Other departures of late include former press secretary Sean Spicer and Anthony Scaramucci, who served a little more than a week as White House communications director.
Sources also told NBC News about Bannon's departure Friday.
Bannon, who had been rumored to be on the outs in Trump's inner circle for weeks, was for a time one of the president's closest aides who spent hours each day in the Oval Office. It had been reported recently that Trump and Bannon hadn't seen each other in person in more than a week, though Bannon advised the president on his response to the violence in Virginia last week.
Trump's response to the situation, in which one person was killed and several injured, was heavily criticized. He initially said the violence was the work of people "on many sides." Two days later, as pressure mounted from Democrats and Republicans alike to disavow racist violence, Trump forcefully condemned some Charlottesville protesters he said were specifically to blame for what happened, but returned to the "both sides" argument a day later.
The Times reported that Bannon's departure was a mutual understanding with Trump, and that he'd submitted his resignation on Aug. 7 as they contemplated the best way to handle the public announcement. The decision for him to leave, the newspaper said, was delayed by the violence in Charlottesville.
Prior to signing on with the Trump campaign, Bannon was the conservative firebrand at Breitbart -- which made a name for itself by railing against mainstream Republicans like House Speaker Paul Ryan, his predecessor John Boehner and the Republican National Committee.
Once he took over the reins of the Trump campaign last summer, Bannon reinforced the hard-line populist message that came to define Trump's "America first" mantra. Central to that effort was Bannon's focus on immigration and opposition to economic "globalism" in the form of free trade agreements and other international compacts like the Paris climate accord. Combined, those issues resonated strongly with disaffected white voters across the South and Midwest, forming the base of the coalition that lifted Trump to the White House.
As the leader of the Trump campaign, Bannon kept mainstream conservatives in the GOP at arm's length. Once in the White House, as Trump sought to bring together disparate factions of the Republican Party into his administration, Bannon clashed with them.
Priebus, the former chairman of the RNC, was named Trump's chief of staff, and for a time he and Bannon were at odds. Bannon also openly feuded with Trump's son-in-law, Jared Kushner, who has become a constant presence in Trump's White House -- and Scaramucci, who let fly with a profanity-laced tirade about Bannon's inflated view of his political maneuvering.
Bannon also clashed for months with national security adviser Lt. Gen. H.R. McMaster after Bannon and his allies were forced off the National Security Council amid concerns they would politicize the nation's top defense panel.