The Swedish parliament passed a vote of no confidence against its Prime Minister Stefan Lofven.
181 of the 349 MPs voted in favour of the motion, while 51 abstained themselves. This is for the first time in history that a sitting prime minister was ousted this way.
Mr Lofven now has a week to resign or call snap elections.
The decision came after a dispute over rent controls led the Left party to withdraw its support for the coalition.
The result means a collapse of the Social Democrat’s minority coalition government with the Green Party.
If the prime minister decides to step down, the parliament’s speaker will have to begin cross-party negotiations to form a new government.
Sweden’s Left party called for the no-confidence vote last week amid a row over proposals to end a rent cap on new-build flats. Although Mr Lofven’s party does not support the measure, it had agreed to consider the plans to appease other opposition parties.
The vote was proposed by the nationalist Sweden Democrats and backed by two centre-right opposition parties.
Any new government would remain in place until general elections, which are set to take place in September next year.