The rebels, now called New Forces, joined the power-sharing government in April under a peace deal brokered by former colonial power France. It was designed to end a civil war in the world's top cocoa-producing country.
"From this moment, the New Forces suspend their participation in the government and the cabinet," said a statement on Tuesday from rebel political leader Guillaume Soro, who is also the communications minister in the coalition government.
He was speaking after a meeting of rebel chiefs in their stronghold of Bouake, the West African country's second city.
The conflict, which started with a failed coup attempt against Gbagbo in September 2002, has been formally declared over but progress towards peace has been bogged down by disputes and both sides remain deeply suspicious of each other.
French and African peacekeepers in the country had warned there was a possibility of the truce disintegrating if the groups who fought in the civil war were not disarmed and encouraged to use democratic processes to register their protests.
Close to 5000 peacekeepers are deployed in Ivory Coast with a majority of them from France.
"From this moment, the New Forces suspend their participation in the government and the cabinet"
rebel political leader
With a 16 million population, largely comprising Christians and Muslims, Ivory Coast was once considered an example of religious harmony in Africa.
In July this year, under a power-sharing agreement between the pro-government south and rebel-controlled Muslim north and west, the various groups started to disarm. This was to complete by mid-September.
But the disarmament process started to flounder when the rebels accused Gbagbo of not keeping to the truce agreement of appointing key ministers from rebel ranks. The government disagrees and has said there are limits to the extent to which the rebels can be accommodated in the government and armed forces.