It is the 10th change in the 21-member strong cabinet of Ahmadinejad, who had described Kordan as a "victim" and insisted he be allowed to remain in the job.
Under Iran's constitution the entire cabinet would have to be submitted to a new vote of confidence if half the ministers change.
Kordan had been under pressure to quit the cabinet post he took up just three months ago after the university denied awarding him any qualification, as he had claimed.
| Ali Larijani, the Iranian parliament's speaker, announced the decision on state radio [EPA]
Ebrahim Nekunam, a member of Iran's parliament, said: "A person who has to be entrusted with the country's security has mocked parliament's trust."
Nekunam said that not only does Kordan, who worked as a university law professor, not possess a Phd in law from Oxford, but also that he "does not have a master's or bachelor's degree".
Kordan accused the media of launching a smear campaign against him by portraying him as a "terrorist" and "violence-seeking person", naming Israeli radio and unnamed Persian-speaking media based outside Iran.
He had shown the purported degree to members of parliament on August 5 but he told the assembly on Tuesday that he would not have presented the degree if he had doubted its validity.
But Bijan Nobaveh, another member of parliament, accused him of "still lying".
He said politicians had sought to "restore the reputation" of the Islamic system by the impeachment as Kordan "had reduced public faith and confidence in the system".
Kordan replaced Mostafa Pour Mohammadi, a critic of Ahmadinejad, in the key post in one of the many cabinet reshuffles since the president took office in 2005.
The interior ministry is charged with maintaining domestic security as well as holding elections, appointing provincial governors and issuing permits for political parties and non-governmental organisations.
Kordan served for years as the administrative and financial vice-president of Iran state television when it was headed by Larijani.
He has also served in Iran's oil ministry.
Kordan had asserted that the degree was issued for his "managerial and executive experience and for submitting a thesis to Oxford University via a person who had opened an affiliate office in Tehran in English-language affairs".
He later said he had approached the university after politicians cast doubt on his degree, but "to my utter disbelief, the university did not confirm [the degree] when my representative went there."
Kordan said he had pressed charges against the person who claimed to be the university's representative in Tehran as soon as he realised his degree was fake.