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Meka Whaitiri will be removed as a minister immediately.
Prime Minister Jacinda Ardern told reporters this afternoon she made the decision after receiving a report into an incident in Gisborne on August 27 between Whaitiri and one of her staff.
"While the facts are in dispute, the report says an incident occurred. Meka Whaitiri continues to contest details of the incident, but there are elements which are agreed," Ardern said.
Ardern would not give further details because it was now an employment matter and said that protecting the privacy of the staff member involved was paramount.
But she said a version of the report would be publicly released.
Ardern said she no longer had confidence in Meka Whaitiri as a minister.
"That is why I have taken the action I have.
"I've made the decision solely on this incident," Ardern said.
"I'm confident in the decision I have made."
But she also left the door open for a return to Cabinet for Whaitiri.
Whaitiri was stood aside from her portfolios on August 30 while the investigation was done by Ministerial Services.
Whaitiri had held the portfolios of Customs, Associate Agriculture, Associate Crown Māori Relations, Associate Forestry and Associate Local Government.
Minister Kris Faafoi, who took over the Customs portfolio when Whaitiri was stood down, would now keep it.
Her associate minister responsibilities would revert to the lead ministers. Ardern said there were no plans for a Cabinet reshuffle.
Ardern said Whaitiri had contested the allegations.
She noted that Labour's Maōri caucus, which had thrown its weight behind Whaitiri - the co-chair, supported her decision.
Whaitiri is the MP for the Māori electorate of Ikaroa-Rāwhiti, which stretches down the east coast of the North Island.