"Osmonakun Ibraimov has submitted his resignation," a spokesman for President Askar Akayev said on Thursday. "It was accepted."
The resignation came on a day when thousands marched towards the government's headquarters, calling for Akayev to step down.
It was the first major protest in the capital Bishkek since opposition supporters seized control of key cities and towns in the south.
In power for 15 years, Akayev was long regarded as the most reform-minded leader in former Soviet Central Asia.
But he has shown an increasingly authoritarian leaning, and in 2002 his reputation was tarnished after police killed six demonstrators protesting the arrest of an opposition lawmaker.
Akayev, 60, is prohibited from seeking another term, but the opposition has accused him of manipulating the parliamentary vote to gain a compliant legislature that would amend the constitution to allow him to stay in office.
Akayev has denied the charge.
Against this backdrop of growing unrest, Prime Minister Nikolai Tanayev cancelled his trip to the southern city of Osh where protesters had taken control of administrative centres.
Kyrgyz officials the opposition is
being manipulated by extremists
The airport in Osh is in opposition hands and remains closed, according to Anvar Artykov, chairman of the self-proclaimed opposition regional governing body.
However, he said he would have allowed Tanayev's aircraft to land.
Kyrgyz officials said drug traffickers or "extremists" are behind the protests in the south, but there have been no indications of any religious sentiment or influence among the demonstrators.
The unrest in Kyrgyzstan comes after opposition protests led to the ouster of entrenched governments and brought Western-leaning leaders to power in the former Soviet states of Georgia and Ukraine in the past 18 months.