The South Korean legislature voted to impeach President Yoon Suk Yeol for his controversial attempt to impose martial law earlier this month.
The impeachment motion passed with 204 votes out of 300 on Saturday.
Yoon is suspended while the Constitutional Court decides whether to reinstate him.
Prime Minister Han Duck-soo will serve as acting president during this period.
“I will do my best in the stable governance of our country,” he said after the vote, NBC News reported.
A presidential election must be held within 60 days if the incumbent is dismissed or resigns.
The impeachment has plunged South Korea into a political crisis, with large demonstrations supporting and opposing the decision.
Yoon's declaration of martial law, which lasted only six hours before being rescinded, was seen as an overreach of power. This has led to widespread calls for his resignation.
The Constitutional Court now has up to six months to decide Yoon's fate, during which time the political landscape remains uncertain.
Economically, the impeachment has created volatility on South Korea's financial markets.
The Bank of Korea has vowed to use all available policy instruments to stabilise the markets and avert any escalation of volatility.
Political turmoil has also led to concerns about the country's sovereign credit rating and potential impact on foreign investment.
Despite these challenges, some analysts believe that impeachment could ultimately lead to a more stable political environment. This may benefit the economy in the long run.
Regionally, the impeachment has raised concerns about South Korea's diplomatic and security posture. Acting President Han Duck-soo has been reassuring allies, including the United States, of South Korea's commitment to maintaining stability and security.
The leadership vacuum comes at a critical time, with the incoming Trump administration in the United States expected to bring significant policy shifts that could affect South Korea's economic and security interests.
The Constitutional Court's decision will be crucial in determining the future direction of South Korea's leadership and its impact on the broader region.