Anatoly Serdyukov has been replaced with a former emergencies minister and loyal ally of Mr Putin, Sergei Shoigu.

Russia's top investigative agency is investigating the sale of ministry assets at prices below market value.

Mr Putin said he had removed Mr Serdyukov to create "conditions for an objective investigation".

Last month, Russian investigators raided the offices of a state-controlled military contractor and began investigating the company amid claims that it had sold assets to commercial firms at a loss of nearly 3bn roubles ($100m; £62.5m).

Oboronservice's activities include servicing military aircraft and arms and constructing military facilities.

Mr Serdyukov was a furniture store executive and head of the Russian tax service before being appointed defence minister in 2007.

The BBC's Steve Rosenberg, in Moscow, says that in the six years that Mr Serdyukov was defence minister, he tried to reform Russia's outdated armed forces by cutting costs and personnel and by boosting efficiency.

But, our correspondent adds, he made enemies along the way, even falling out with his own father-in-law, former Deputy Prime Minister Viktor Zubkov.