New York Police Commissioner James O'Neill fired Daniel Pantaleo with immediate effect over the death of 43-year-old Eric Garner during an arrest in July 2014.
The incident sparked "Black Lives Matter" protests calling for police to be held accountable for the deaths of unarmed African-Americans in custody or facing arrest.
Garner's last words - "I can't breathe," which he repeated 11 times to Pantaleo - became a rallying cry for the demonstrators.
O'Neill's decision to dismiss Pantaleo came after NYPD Deputy Commissioner and departmental administrative judge Rosemarie Maldonado recommended earlier this month that he be fired.
"It is clear that Daniel Pantaleo can no longer serve as a New York City police officer," O'Neill said, adding that it had been a "difficult decision."
US policeman suspended over choking death of black man
He said police officers had one of the hardest jobs in the world and that some would be "angry" with him, but he was absolutely sure he had made the right call.
"Make no mistake about it, this was a tragedy for the Garner family. I fully understand that. Mr Garner was somebody's son, somebody's dad. Everybody in the NYPD understands that," he told reporters.
Pantaleo was suspended pending the decision by O'Neill, who had the final say on the officer's future.
Four officers attempted to arrest Garner, 43, on suspicion of illegally selling cigarettes on a sidewalk in Staten Island on July 17, 2014.
In a video recorded by a bystander that went viral, Pantaleo can be seen putting his arm tightly around Garner's neck and driving the much larger suspect into the pavement before releasing him.
Meanwhile, another officer pressed Garner's head to the pavement.
Garner, who resisted arrest but was unarmed, appeared to lose consciousness, and the father-of-six was taken to a hospital where he was pronounced dead.
A New York state grand jury decided in December 2014 that there was insufficient evidence to support homicide charges against Pantaleo, amid claims that Garner suffered from a heart condition and asthma that could have caused his death.
The victim's family appealed to the US Department of Justice to consider whether federal criminal or civil rights charges could be brought against one or more of the officers in the case.
Last month the Justice Department determined that Pantaleo would not face federal charges, a decision that Garner's family slammed as an "insult."
"I thank Commissioner O'Neill for doing the right thing. You finally made the decision that should have been made five years ago," Garner's daughter Emerald Garner said on Monday.
African-American rights leader Al Sharpton said he and the family were "relieved but not celebratory," adding that they would continue to fight for criminal charges.
Mayor Bill de Blasio, a candidate for the 2020 Democratic nomination said justice "had been done."
But police union leader Patrick Lynch accused O'Neill of choosing "politics and his own self-interest ahead of the police officers he claims to lead."
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