The motion of no confidence garnered 238 votes in favour, five more than the required minimum of 233, in the 465-seat bicameral parliament, Xinhua reported.
The cabinet led by Social Democrat leader Viorica Dancila became the fourth government to fall in Romania in the last 30 years.
This was the third censure motion that the outgoing Prime Minister has encountered since taking office at the end of January, 2018.
Dancila's cabinet has failed to survive the crisis after her cabinet was abandoned by its coalition partner in late August and lost the overall majority in parliament.
President Klaus Iohannis will now consult the parliamentary parties and designate a new candidate for the seat of Prime Minister. Within 10 days, the nominee will then have to present a new team and a programme for parliament approval.
The collapse of the Dancila government will usher in a period of uncertainty in the country's political arena. The opposition parties in parliament have come together for the first time in many years in order to overthrow the current government.
The government was toppled exactly one month before the presidential elections scheduled for November 10. Both the incumbent president, as a favourite, and the outgoing Prime Minister are running for the highest office in the country.
( With inputs from IANS )