One senior figure hailed the move as “the rebirth of Ukip”.
Activists voted by 867 to 500 to give the former Army officer his marching orders after fewer than six months in the job at a crisis meeting in Birmingham.
His departure leaves Ukip having to hold its fourth leadership contest since the 2016 referendum.
It is an election the cash-strapped party can ill afford, already facing the threat of hefty legal costs over a defamation action brought by Rotherham’s three Labour MPs against MEP Jane Collins.
Henry Bolton and interim leader Gerard Batten were in attendance at the crisis meeting in Birmingham
Ukip is the only real opposition to the political establishment…Supporters need to get behind us for the fight to deliver proper Brexit
But interim leader and MEP Gerard Batten said members had made the right decision to sack Mr Bolton, who had resisted calls to quit following controversy around his private life.
Mr Bolton had attempted to cling on to the leadership despite last month’s no confidence vote by the ruling national executive committee and a revolt by senior figures in the party in protest at his relationship with model Jo Marney.
The 54-year-old left his wife for Ms Marney, 25, shortly before Christmas.
It subsequently emerged Ms Marney had posted racist messages about Meghan Markle, Prince Harry’s fiancee, and black people.
Henry Bolton was seen leaving the conference after losing the vote of no confidence
Mr Bolton condemned her remarks as unacceptable and indicated the “romantic” part of their relationship was over – but the pair were pictured together just days later.
Mr Batten said: “Ukip is the only real opposition to the political establishment…They need to get behind us for the fight to deliver proper Brexit, a complete unencumbered exit from the European Union.”
On the party’s financial difficulties, he said: “I believe once we get the show back on the road, we will get the donors back, we will get the people back in, who will fund the party.”
Mr Batten also defended previous controversial comments in which he described Islam as a “death cult” steeped in violence, insisting he had been talking about an ideology rather than individuals.
Controversy arose after Joe Marney posted racist messages about Meghan Markle
He also had a message for Mr Bolton, who has not ruled out legal action over his treatment, telling him: “Get on with the rest of your life.”
Welcoming the result, Neil Hamilton, Ukip’s leader in Wales, said: “It’s the rebirth of Ukip.
“Henry Bolton has been a catastrophe as leader.
“He should have seen this coming and the fact that he didn’t is the mark of his ineptitude.”
Paul Oakden, the UKIP interim Party Chairman, announced the results of the vote in Birmingham
He was concerned about the future of Brexit, highlighting government splits.
Mr Hamilton said: “Ukip needs to be a strong voice for the 17.5 million who voted to leave in the referendum. We have all been very frustrated at the trauma which we have had to endure. The distraction, the waste of time, wasted energy.
“We’ve now got to rebuild the party and I hope the thousands of people that have left, partly as a result of Henry Bolton, will come back to us and carry on where we left off.”
Mr Bolton has admitted he still has “strong affections” for his former girlfriend and accused rivals of “stirring the pot”.
Asked if they were going to get back together, Mr Bolton said: “I have said all along that once we got the meeting out of the way I would spend time sorting out my private life.
“I am going to get on and do that.”
Former Ukip leader Nigel Farage had backed Mr Bolton to stay in the job, warning the alternative was for the party to “carry on down the path of self-destruction into irrelevance”.