Thousands of protesters, angry at the government's mishandling of Covid-19, had flooded onto the streets and clashed with police on Sunday.
President Kais Saied announced he would take charge with help from a new prime minister, saying he intended to bring calm to the country.
But opponents branded his move a coup.
After an emergency security meeting on Sunday, Mr Saied said in a televised address: "We have taken these decisions... until social peace returns to Tunisia and until we save the state."
Protesters erupted with celebrations at the news Prime Minister Hichem Mechichi had been sacked. President Saied joined crowds in the capital Tunis
Thousands of people had demonstrated against the ruling party in Tunis and other cities, shouting "Get out!", and calling for parliament to be dissolved.
Security forces blocked off parliament and streets around central Avenue Bourguiba, the centre of anti-government protests during Tunisia's 2011 revolution.
Police fired tear gas at protesters and made arrests in several other towns.
Protesters stormed the offices of the governing Ennahda party, smashing computers and setting fire to its local headquarters in Touzeur.
The party denounced the attack, blaming "criminal gangs" who were trying to "seed chaos and destruction".