The dissolution of the government has thrown into doubt the political reconciliation process in Ivory Coast, which was about to hold elections.
Five years after the president's term ended, the country has yet to hold a ballot to replace him.
Al Jazeera's Yvonne Ndege, reporting from Abidjan, said protesters are extremely angry about Gbagbo's decision to dissolve the government.
"The opposition, who were part of the government of national unity, have said that they will not recognise any new government that is formed by Gbagbo or any new electoral commission," she said.
"So the country is entering its sixth night without a government and without an electoral body.
"Naturally, a lot of the people who are supporting the opposition have no choice but to take to the streets in defiance of Gbagbo and that decision that he took."
The now-defunct government was the consequence of a peace agreement signed by Gbagbo's government and the New Forces rebels in 2007, after a civil war that had split the country into a rebel-held north and a government-controlled south.
The unity government was composed of 33 ministers from all political parties and rebel factions.
At the heart of the impasse that has delayed elections for five years is the question of who can qualify to vote.
Before its brief civil war, Ivory Coast was one of Africa's economic stars boasting a modern, cosmopolitan capital which lured tens of thousands of immigrants from poorer neighboring nations.
At least a quarter of the nation's 20 million people have been disqualified from voting based on the electoral law's convoluted definition for determining eligibility, stoking tension.
The opposition says most of those disqualified by the election commission were from ethnic groups in the north who were unlikely to vote for Gbagbo.