The head of Moqtada Sadr's Iraqi parliament bloc says the radical cleric has ordered his ministers to withdraw from the cabinet.
Moqtada Sadr's political group has six cabinet ministers
Mr Sadr's bloc, which has six cabinet ministers, is trying to press Prime Minister Nouri Maliki to set a timetable for a US troop withdrawal.
Mr Maliki has refused, saying a pullout depends on conditions on the ground.
Analysts say Mr Sadr holds great power among Iraq's Shia majority, but the unity government is likely to survive.
Last week, hundreds of thousands of people attended a rally in the Shia city of Najaf organised by Mr Sadr to protest against the continued presence of US-led troops in Iraq.
Mr Sadr did not appear at the rally in person. US officials say he has fled to Iran, but aides say he is still in Iraq.
Sadr parliamentary bloc leader Nassar Rubaie announced the move at a news conference in Baghdad, attended by allies from the bloc.
"Considering the public interest, we found that it was necessary to issue an order to the ministers of the Sadr bloc to immediately withdraw from the Iraqi government," he said, reading a statement from Mr Sadr.
"The six ministries shall be handed over to the government itself, hoping that this government would give these responsibilities to independent bodies who wish to serve the interests of the people and the country."
Mr Sadr's bloc has 32 lawmakers in the country's 275-member government.
Age: Early 30s
Youngest son of influential cleric Muhammad Sadiq Sadr (assassinated in 1999)
Formed Mehdi Army in 2003
Joined main Shia coalition in 2005, but periodically withdrew over its close ties with US
The BBC's Jim Muir in Baghdad said the decision to quit did not come as surprise, and was not being seen as an attempt to bring down the government.
The gesture of calling for independent technocrats was welcomed in a statement from Mr Maliki, who also said he appreciated the Sadr movement's support for the political process.
While it has withdrawn from the cabinet, the Sadr group has not left the governing coalition.
Our correspondent says Mr Sadr's decision appears to have been triggered primarily by the government's failure to heed the Najaf demonstration.
Late last year Mr Sadr's bloc staged a two-month boycott of parliament to protest against the continuing closeness of the relationship between Mr Maliki and the US administration.
Mr Sadr's Mehdi Army militia has been described by the US as the greatest threat to security in Iraq.
Before Mr Sadr entered mainstream politics the Mehdi Army launched two uprisings against US-led foreign forces in Iraq.
Separately on Monday, about 3,000 people marched through the centre of Basra demanding the resignation of the provincial governor.
The protesters accuse Muhammad al-Waili of corruption and say he has failed to improve the supplies of essential services including power and water.
Mr Maliki had asked for the demonstration to be called off, saying complaints about the governor should be dealt with through the democratic process not through street protests.
Mr Waili accuses organisers of march of being a front for political foes, including radical Mr Sadr's militia.