His departure upends Trump's senior team after less than one month in office.
In a resignation letter, Flynn said he gave Vice President Mike Pence and others "incomplete information" about his calls with Russia's ambassador to the US. The vice president, apparently relying on information from Flynn, initially said the national security adviser had not discussed sanctions with the Russian envoy, though Flynn later conceded the issue may have come up.
Trump named retired Lt. Gen. Keith Kellogg as the acting national security adviser. Kellogg had previously been appointed the National Security Council chief of staff and advised Trump during the campaign.
Trump is also considering former CIA Director David Petraeus and Vice Admiral Robert Harward, a US Navy SEAL, for the post, according to a senior administration official.
The Trump team's account of Flynn's discussions with the Russian envoy changed repeatedly over several weeks, including the number of contacts, the dates of those contacts and ultimately, the content of the conversations.
Late last month, the Justice Department warned the White House that Flynn could be in a compromised position as a result of the contradictions between the public depictions of the calls and what intelligence officials knew to be true based on recordings of the conversations, which were picked up as part of routine monitoring of foreign officials communications in the US.
A US official told The Associated Press that Flynn was in frequent contact with Ambassador Sergey Kislyak on the day the Obama administration slapped sanctions on Russia for election-related hacking, as well as at other times during the transition.
An administration official and two people with knowledge of the situation confirmed the Justice Department warnings on the condition of anonymity because they were not authorized to discuss the matter publicly.
It was unclear when Trump and Pence learned about the Justice Department outreach.
Trump never voiced public support for Flynn after that initial report, but continued to keep his national security adviser close. Flynn spent the weekend at Trump's Mar-a-Lago estate and was in the president's daily briefing and calls with foreign leaders Monday. He sat in the front row of Trump's news conference with Canadian Prime Minister Justin Trudeau Monday afternoon.
White House officials sent contradictory messages about Flynn's status throughout the day. Counselor Kellyanne Conway said Trump had "full confidence" in Flynn, while spokesman Sean Spicer said the president was "evaluating the situation" and consulting with Pence about his conversations with the national security adviser.
Flynn's discussions with the Russian raised questions about whether he offered assurances about the incoming administration's new approach. Such conversations would breach diplomatic protocol and possibly violate the Logan Act, a law aimed at keeping citizens from conducting diplomacy.
Administration officials said misleading Pence was ultimately Flynn's downfall, though they insisted he resigned and was not fired by Trump.