Mr Trump had criticised his top law official for months, mainly over his refusal to oversee the investigation into alleged Russian meddling in favour of Mr Trump's election in 2016.
Mr Sessions's chief of staff, Matthew Whitaker, who has criticised the inquiry, will take over temporarily.
Special Counsel Robert Mueller is investigating alleged collusion between the Trump campaign and Russia.
Mr Mueller's wide-ranging investigation has resulted in a series of criminal charges against several Trump associates.
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