In January Mr McCabe stepped down from his position as deputy director.
He had been deeply involved in the FBI investigations into Hillary Clinton's use of email and Russia's alleged meddling in the presidential campaign.
The sacking comes two days before his 50th birthday, when he was expected to retire with pension rights.
President Trump welcomed Mr Sessions' decision in a tweet.
Andrew McCabe FIRED, a great day for the hard working men and women of the FBI – A great day for Democracy. Sanctimonious James Comey was his boss and made McCabe look like a choirboy. He knew all about the lies and corruption going on at the highest levels of the FBI!
Why was McCabe fired?
Mr Sessions, who heads the justice department, said the decision had been taken "after an extensive and fair investigation" into Mr McCabe.
He said an internal investigation report concluded that Mr McCabe had "made an unauthorised disclosure to the news media".
Mr Sessions is said to be under pressure, amid extensive reshuffling of White House staffstaff
In a statement late on Friday Mr Sessions said: "Based on the report of the Inspector General, the findings of the FBI Office of Professional Responsibility, and the recommendation of the Department's senior career official, I have terminated the employment of Andrew McCabe effective immediately."
Mr McCabe officially stepped down as deputy director in January pending the review. The White House denied he had been pressured into the decision.
He was placed on leave, but has remained on the FBI's books ahead of his expected retirement.
He has been with the bureau for two decades, and the firing could put his federal pension in doubt.
How did he respond?
Mr McCabe issued a lengthy statement after his firing.
He called it an attack on his credibility, and said it was part of a "larger effort" to discredit the US intelligence community as a whole.
"I am being singled out and treated this way because of the role I played, the actions I took, and the events I witnessed in the aftermath of the firing of [FBI director] James Comey," Mr McCabe said in a statement.
Mr Comey was fired in May last year by the president, who cited his handling of the Clinton email investigation.
The former director's most revealing moments
Mc Comey later told a Senate hearing that Mr Trump had requested his "loyalty", amid an on-going FBI investigation into allegations of Russian interference in the 2016 election 2016.
In his statement, Mr McCabe alleges that the release of the report recommending his own firing was "accelerated" after he indicated that he would corroborate Mr Comey's version of events.
Why did Trump object to McCabe?
Mr Trump has been a frequent critic of Mr McCabe, whom he accuses of political bias in his roles in the Russia and Clinton email investigations.
He has publicly pointed to donations Mr McCabe's wife, a Democrat, received from a Clinton ally when she ran for the Senate in 2015.
The White House said it was for the attorney general, not President Trump, to fire McCabefire Mr McCabe
In December the president tweeted: "FBI Deputy Director Andrew McCabe is racing the clock to retire with full benefits. 90 days to go?!!!"
In his statement, Mr McCabe said he and his family had been targets of an "unrelenting assault" in the media to undermine his reputation, and said Mr Trump's tweets had "amplified and exacerbated it all".
Why has it happened now?
With time ticking until his official retirement, pressure has been building on Mr Sessions to make a move.
On Thursday White House Press Secretary Sarah Huckabee Sanders said any decision for his dismissal should be made by the Attorney General.
"That's a determination that we would leave up to Attorney General Sessions," she said.
"But we do think it is well documented that he has had some very troubling behaviour and by most accounts a bad actor and should have some cause for concern."