Health Secretary Shona Robison has called for the chairman of NHS Tayside to quit as the health board is put in special measures.
Shona Robison said the chief executive's position was also "untenable".
Concerns have been raised about the use of funds donated to the health service for IT improvements.
NHS Tayside has a significant funding gap, and has received emergency loans from the Scottish government.
The current board has said it inherited a difficult situation.
It has been claimed the health board used cash from an endowment fund to cover planned expenses including new computer systems in 2014.
Politicians say there was an "apparent misuse" of funds, but the health board insists it was "appropriate".
Ms Robison has instructed the chief executive of NHS Scotland to "strengthen the leadership of NHS Tayside with immediate effect".
Speaking on the BBC's Good Morning Scotland radio programme, the health secretary confirmed she had written to NHS Tayside chairman Prof John Connell asking him to step down.
"This isn't a step I have taken lightly," she said.
"I've asked the chair to consider his position and stand down and I should say this is no reflection on his personal probity or commitment, but it is clear that progress remains insufficient and despite assurances new issues keep emerging.
"We need to restore public confidence and we need new leadership to do that."
Ms Robison has also described the position of NHS Tayside chief executive, Lesley McLay, as untenable.
The health secretary said: "Issues over past few weeks have laid bare the extent of the problems facing NHS Tayside and the minutes of a meeting of trustees in 2014 outline, in detail, the approval of the use of endowment funds by the chief executive.
"It has become clear to me that the current structure of the board cannot deliver the improvements required to return to a sustainable position, while continuing to deliver safe and effective services to patients.
"In particular, I have concerns about the overall management of the board's finances and the ability of leadership to carry through the change required to bring the board back into financial balance.
"As such, I will be exercising ministerial powers of intervention and moving NHS Tayside to the highest level of escalation."
'Review of the board'
Prof Connell has previously said that the board at NHS Tayside inherited a difficult situation and that he had only taken up his role two and a half years ago.
NHS Tayside has received extra funding from the Scottish government amounting to tens of millions of pounds.
The health secretary is acting under a power of intervention covered by the National Health Service (Scotland) Act 1978.
Ms Robison added: "It is imperative that all boards use charitable donations for the purposes of which they were given.
"At my request, the chief executive of NHS Scotland has written to every NHS board chair seeking assurance that endowment monies are being spent for the correct purposes.
"We are also engaging directly with OSCR (Office of the Scottish Charity Regulator) on this issue."
Convenor of the Scottish parliament's public audit committee, Labour MSP Jenny Marra, backed with Ms Robison's decision to ask Prof Connell to step down.
Ms Marra told BBC Scotland: "I would like to see a review of the whole board, to see that the people on it are requisitely skilled to ask the right questions of management.
"I would like to see a team come in to really try and push through reform.
"Audit Scotland have told NHS Tayside what they have to do. Prescribing is one of the main issues and agency costing for nurses is another."