"Secretary of Health and Human Services Thomas Price offered his resignation earlier today and the president accepted," White House press secretary Sarah Huckabee Sanders said in a statement.
The announcement came less than an hour after Trump told reporters that Price had not offered to resign, but that his fate would be decided later Friday.
"The President intends to designate Don J. Wright of Virginia to serve as Acting Secretary, effective at 11:59 pm on September 29, 2017," Sanders said.
Wright is currently deputy assistant secretary for health.
For days Price has battled to keep a position he has held for less than eight months.
In all, Price has flown on 26 separate trips this year on private aircraft, totaling some $400,000, according to Politico.
He had tried to put a lid on the scandal by paying back what turned out to be a fraction of the cash spent.
The trips were for government business, Price's department said, but some of the flights were to destinations where Price owns property, or where he met relatives.
Trump had earlier indicated that Price's job was hanging by a thread.
"We'll be announcing something today," Trump said, "I don't like the optics." He added: "I'm not happy, I can tell you I'm not happy."
Trump described the former congressman as "a very fine person," adding that for some cabinet secretaries it was not a problem because they have their own planes.
Other cabinet secretaries, including Treasury's Steve Mnuchin are also accused of using private jets.
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