The Kuwaiti parliament has voted to oust the new emir on health grounds, the first time a Gulf ruler has been removed by a constitutional process.
Emir Sheikh Saad has taken little part in public life
Kuwait has been gripped by a leadership crisis since Sheikh Saad al-Abdullah succeeded his late cousin 10 days ago.
MPs met in closed session after efforts to resolve the matter within the ruling family failed to produce a compromise.
The cabinet will run the oil-rich Gulf state until a replacement is chosen. It is expected to be the current PM.
Sheikh Sabah al-Ahmad - the half-brother of the late Emir Sheikh Jaber al-Ahmad - has been the de facto ruler the country for several years.
Earlier, government officials said Sheikh Saad had agreed to abdicate, but no such declaration was received by MPs.
Sheikh Saad is a popular figure in Kuwait, though he has played little part in public life recently because of chronic poor health.
He appeared only briefly during condolences for his late cousin Emir Sheikh Jaber last week - in a wheelchair, receiving handshakes and kisses on the shoulder from mourners.
Parliament speaker Jassem al-Khorafi said the vote was taken moments before a letter of abdication from Sheikh Saad arrived.
"The house listened to the emir's medical report and it became evident to the house, beyond any doubt, to transfer the emir's responsibilities permanently," he said.
"The emir remains in the hearts of all Kuwaiti people. We all love, appreciate and respect him, but this is God's will. We can only wish him a quick recovery," he added.
Earlier on Tuesday, a government official said Sheikh Saad had unconditionally agreed to abdicate in the interests of Kuwait.
Sheikh Sabah has in effect been running the country for years
This was welcomed by MPs, who said they did not want to take sides in what is a dispute between difference branches of the Sabah family.
However, the parliamentary debate went ahead after several postponements to give Sheikh Saad more time to consider his position.
"Lawmakers don't want to take sides," said Walid Tabtabai, from the Islamist faction.
Hussein al-Qallaf, a Shia MP, said: "I never wanted things to reach the point of removing his highness the emir."
Constitutionally, parliament can remove an emir on health grounds with a two-thirds majority, after it has been asked to by the cabinet.
The cabinet sent a letter to parliament on Monday saying the emir had "lost his health capability to exercise his constitutional prerogatives".
Soon afterwards, an announcement from the emir's side said he wanted to take the oath of office before parliament met, but this was rejected by parliament.
Tradition in the Sabah ruling dynasty stipulates that the position of emir should alternate between the two main branches of the family.
These are the Jaber branch, of which Sheikh Sabah and the late emir are members, and the Salem branch which produced Sheikh Saad.
The public conflict between the two branches over the succession stunned the normally tranquil circles of Kuwaiti politics.
However, there do not appear to be any fundamental differences between the two branches, correspondents say, and Kuwait's oil policy and pro-Western stance are expected to continue.
The emirate controls about 10% of the world's proven oil reserves and is a key US ally in the region.
Sheikh Saad is the son of the founder of modern Kuwait, Sheikh Abdullah al-Salem, and is remembered fondly for his role in rallying support during the 1990-91 Gulf crisis.