His sudden and unprecedented departure comes during a period of significant political upheaval in Vietnam, where the anti-graft purge and factional fighting have seen several ministers fired.
In an extraordinary meeting that was closed to international media, more than 93 per cent of National Assembly members voted to approve Phuc's resignation, state media said.
With no successor yet appointed, Vo Thi Anh Xuan, the current vice president, automatically becomes interim president, according to the constitution.
Authoritarian Vietnam is run by the Communist Party and officially led by the general secretary, president, and prime minister.
Key decisions are made by the politburo, which now numbers 16.
The sudden departure of Phuc is a highly unusual move in Vietnam, where political changes are normally carefully orchestrated, with an emphasis on cautious stability.
On Tuesday, the Communist Party ruled the 68-year-old was responsible for wrongdoing by senior ministers under him during his 2016 to 2021 stint as prime minister, before he became president.
Two deputy prime ministers - Pham Binh Minh and Vu Duc Dam - were sacked this month in an anti-corruption purge that has led to the arrest of dozens of officials, with many of the graft allegations relating to deals done as part of Vietnam's COVID-19 pandemic response.
"TRANSFORMING THE PARTY"
General Secretary Nguyen Phu Trong - the most powerful man in the party - is widely seen as the architect behind the anti-corruption drive, which has proved popular among the Vietnamese public.
Jonathan London, an expert on contemporary Vietnam, said the "dramatic culmination" of the campaign was "transforming the party at its highest levels".
"People can use the terminology of a political purge," he told AFP.
"But I think it's perhaps better understood as a coincidence of internal competition within the party and then these major missteps by these people in senior positions."
Only one other Communist Party president has ever stepped down, and that was for health reasons.
Analysts are divided over whether losing Phuc - who has significant experience in the international arena - will have significant consequences for the country.
Le Hong Hiep, a fellow at the ISEAS-Yusof Ishak Institute in Singapore, said the collective nature of Vietnam's leadership meant major policy changes were unlikely.
But for London, the turnover of personnel meant "a risk Vietnam is left with few people in positions of authority ... who have experience and competency" on the international stage.
Phuc was elevated to the largely ceremonial role of president in April 2021 after winning plaudits for the country's broadly successful handling of the pandemic.