Trump had also reportedly grown frustrated that Bondi was not moving quickly enough to prosecute critics and adversaries who he wanted to face criminal charges.
In a social media post, Trump praised Bondi as a "Great American Patriot and a loyal friend" and said she will move to a job in the private sector.
Trump said Deputy Attorney General Todd Blanche, his former personal lawyer, will lead the Justice Department in the interim.
During her tenure as the top US law enforcement official, Bondi was a combative champion of Trump's agenda.
But it was repeated criticism over the Epstein files, including from Trump allies and some Republican lawmakers, that came to dominate her tenure.
Bondi was accused of covering up or mismanaging the release of records on the Justice Department's sex trafficking investigations into Epstein, a financier who cultivated ties with an array of wealthy and powerful figures.
The issue created political headaches for Trump and drew renewed scrutiny of his past friendship with Epstein, which he has said ended decades ago.
Bondi is the second senior official in Trump's administration to be ousted recently.
Trump removed Homeland Security Secretary Kristi Noem on March 5 following criticism of her management of the agency and Trump's immigration agenda.
Bondi, a former Republican state attorney general in Florida, said she worked on restoring the Justice Department's focus on violent crime and rebuilding trust with Trump's supporters after federal prosecutors twice criminally charged Trump during his years out of power.
Bondi also faced criticism over the removal of dozens of career prosecutors who worked on investigations disfavoured by Trump, with critics accusing her of abandoning the DOJ's traditional focus on even-handed justice.
Bondi defended the rollout of the Epstein files, saying the administration had been more transparent on the issue than previous presidents and that DOJ lawyers worked on a compressed timeline to review reams of material.
During a combative hearing before a House of Representatives panel in January, Bondi responded to criticism with political attacks directed at lawmakers.
She refused to apologise or look at Epstein victims and their relatives who attended the proceedings.
The release of about three million pages of records about Epstein still did not quell the controversy, as lawmakers criticised redactions in the files and the disclosure of the identities of some victims.
The Republican-led House Oversight Committee voted to subpoena Bondi and she was set to testify on April 14.
