The controversial monument has been on public view for two years
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Alabama's Chief Justice has been removed from office for disobeying a legal order to move a Ten Commandments monument from a court building.
The state court imposed the harshest penalty possible on Roy Moore after a one-day trial in Montgomery.
At the trial, Mr Moore said his refusal was a moral acknowledgement of God.
The granite monument was removed in August after a US federal judge ruled that it violated the constitutional separation of church and state.
A federal appeals court upheld the ruling, and last week the US Supreme Court refused to hear the chief justice's appeal.
The removal of the monument caused an outrage among America's religious protesters who described the move as "a lamentable day in Alabama and the United States".
'Roy's Holy Rock'
In an unanimous decision, the nine-member judicial panel of Alabama's Court of the Judiciary said Mr Moore had "placed himself above the law" by "wilfully and publicly" defying the federal order.
Judge Moore has become a hero of America's religious right
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"Finding no other viable alternatives, this court hereby finds that Roy S. Moore be removed from his position," the panel's statement said.
But speaking after the ruling, a defiant Moore told his supporters he had only acknowledged God as is done in other official procedures and documents.
"That's all I've done. I've been found guilty," he was quoted as saying by the Associated Press news agency.
The 2,400 kilogram (5,300-pound) slab - installed by Mr Moore and nicknamed Roy's Holy Rock - had dominated the rotunda of the building for two years until it was placed into a storage room on 27 August.
The chief justice - who was halfway through his six-year term - had been suspended on charges of violating canons of judicial ethics.