Parliament in the Cayman Islands has passed a vote of no confidence in Premier McKeeva Bush, who is facing corruption allegations.
The motion in effect removes him as head of government in the British overseas territory.
Mr Bush, who was briefly detained for questioning last week, says he is the victim of a "witch hunt".
The next step lies with the British-appointed governor, Duncan Taylor, who may decide to call early elections.
The other option is to see whether the fractured governing party can try to form a new government.
The no-confidence motion was passed by 11 votes to three, with members of Mr Bush's own United Democratic Party (UDP) voting against him.
He is suspected of misusing of a government credit card and importing explosive devices without a permit.
Mr Bush, who was detained on 11 December and released the next day after questioning, made it clear he would not resign.
He has suggested he is being targeted by senior island officials as part of a "very vindictive political witch hunt".
Mr Bush, 57, has been in power since the UDP won general elections in 2009 and also held the posts of minister of finance, tourism and development.
The Cayman Islands is a major financial centre and a global tax haven.