“If you want leaders who will enable and spread (Mr Trump’s) destructive lies, I’m not your person,” she told a meeting of House Republicans.
She ended her speech with a quote from Jesus Christ.
“Ye shall know the truth, and the truth shall set you free.”
She was then ousted from her position as Chair of the House Republican Conference by a voice vote from her colleagues.
Chair of the House Republican Conference is the third-highest ranking position in the Republican House leadership.
No other woman holds a senior leadership position in the congressional Republican party.
Since she came out in support of impeaching Mr Trump in January, she has been a frequent target of the former president.
“She has no personality or anything good having to do with politics or our Country.
“She is a warmonger whose family stupidly pushed us into the never-ending Middle East Disaster, draining our wealth and depleting our Great Military, the worst decision in our Country’s history.”
Senate Majority Leader Chuck Schumer, a Democrat, said Ms Cheney had been fired for telling truth to power.
“Today they have reached a new and very dangerous low point,” Senator Schumer said.
“Earlier this point the House GOP ousted Liz Cheney from the party’s leadership. Her crime? Telling the truth.”
Ms Cheney was chosen for the leadership position two years ago.
The daughter of former Vice President Dick Cheney, the congresswoman has a long record as a conservative.
She is now facing an uphill battle to be renominated for her seat representing the entire state of Wyoming.
Wyoming supported Mr Trump by a wider margin than any other state in last November’s election, getting nearly 70 percent of the voice.
Ms Cheney’s likely replacement as conference chair is Elise Stefanik, a 36-year-old from upstate New York.
Ms Stefanik was elected to Congress as a moderate in 2014, but has since shifted towards becoming an ardent supporter of Mr Trump.
Vote to impeach Donald Trump finalised in writing
Texas firebrand conservative Chip Roy has also thrown his hat into the ring.
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