Conservative MPs voted 90 to 75 to sack Duncan Smith on Wednesday. The Tory MPs must now begin their hunt for a new leader to head the country's main opposition party.
The results ended weeks of speculation over the future of Duncan Smith, who is blamed for the Conservative's failure to capitalise on Labour Prime Minister Tony Blair's follies.
Duncan Smith conceded defeat shortly after the results were known.
"The parliamentary party has spoken, the announcement has been made and I will stand down as leader when a successor has been chosen," Duncan Smith said.
He promised to support his successor, saying "I will give that leader my absolute loyalty and support."
Haunted by inner-party dissensions and a gathering rebellion, Duncan Smith had sought the confidence vote to put an to the squabbling.
"The parliamentary party has spoken, the announcement has been made and I will stand down as leader when a successor has been chosen"
Iain Duncan Smith,
Conservative Party leader
But the resounding sack effectively put a dent in Duncan Smith's political career and his lingering ambition of becoming UK's next prime minister.
"The motion of confidence in Duncan Smith's leadership has been defeated," Michael Spicer, who supervised the vote, said.
All 165 Conservative members of the House of Commons turned up for the vote.
Duncan Smith had been under fire from within the party for his alleged lacklustre leadership.
Tory MPs were particularly worried about their "electibility" in the next general elections, possibly 18 months away.
Duncan Smith's ousting brings about the third change in Conservative leadership since they were defeated by Tony Blair's New Labour in the 1997 elections.