Park becomes South Korea's first democratically elected leader to be forced from office. A presidential election will be held in 60 days, according to the constitution.
"We remove Park Geun-hye from office," Lee Jung-mi, acting president of the court, told the hearing. "Her actions betrayed the people's confidence. They are a grave violation of law which cannot be tolerated."
The ruling to uphold parliament's Dec. 9 vote to impeach Park over an influence-peddling scandal is the most dramatic twist in a political crisis that has gripped the country for months.
The political crisis has come at a time when rival North Korea is pushing ahead with its missile programme and tension is brewing with China over a U.S. missile-defence system being deployed in South Korea.
The Seoul market's benchmark KOSPI index rose after the ruling.
"As the saga is coming to an end, markets will be relieved that South Korea finally can push forward to press ahead with electing new leadership," said Trinh Nguyen, senior economist at Natixis in Hong Kong.
"And the hope is that this will allow the country to have a new leader that can address long-standing challenges such as labour market reforms and escalated geopolitical tensions."
People celebrate after hearing that President Park Geun-hye's impeachment was accepted in front of the Constitutional Court in Seoul, South Korea, March 10, 2017. Photo by Reuters/Kim Hong-Ji.
Park, 65, was been accused of colluding with a friend, Choi Soon-sil, and a former presidential aide, both of whom have been on trial, to pressure big businesses to donate to two foundations set up to back her policy initiatives.
She was also accused of soliciting bribes from the head of the Samsung Group for government favours, including backing a merger of two Samsung affiliates in 2015 that was seen as supporting the succession of control over the country's largest "chaebol" conglomerate.
Park has denied any wrongdoing.
Hundreds of demonstrators, both for and against Park, have gathered at the courthouse, which was blockaded by police buses.
Prosecutors have named Park, who now loses her presidential immunity from prosecution, as an accomplice in two court cases linked to the scandal, suggesting she is likely to be investigated and could face legal proceedings.
Park was stripped of her powers after parliament voted to impeach her but has remained in the president's official compound, the Blue House.
She did not appear in court on Friday.
Prime Minister Hwang Kyo-ahn was appointed acting president and will remain in that post until the election.
The scandal has led to weekly protests by tens of thousands of people, not only those who want Park to step down but also her supporters calling for her to stay on in power.
FILE PHOTO: South Korean President Park Geun-hye salutes during a joint commissioning ceremony for 5,860 new officers from the Army, Navy, Air Force and Marines at the military headquarters in Gyeryong, south of Seoul March 6, 2014. Photo by Reuters/Jung Yeon-je/Pool/File Photo
U.S. to be 'steadfast' South Korea ally after Park's ouster
The United States looks forward to a "productive relationship" with the next South Korean president, a U.S. embassy spokesman said on Friday following the removal of President Park Geun-hye from office over a corruption scandal.
"The United States continues to be a steadfast ally, friend, and partner to the Republic of Korea," the spokesman told Reuters. "Ultimately, it is a domestic issue for the people of Korea to decide through their democratic process and we respect their decisions".
The United States has 28,500 troops stationed in South Korea.