In a letter to Comey, Trump said the firing was necessary to restore "public trust and confidence" in the FBI. Comey has come under intense scrutiny in recent months for his public comments on an investigation into Democrat Hillary Clinton's email practices, including a pair of letters he sent to Congress on the matter in the closing days of last year's campaign.
This is only the second firing of an FBI director in history. President Bill Clinton dismissed William Sessions amid allegations of ethical lapses in 1993.
Trump made no mention of Comey's role in the Clinton investigation, which she has blamed in part for the election result. But in announcing the firing, the White House circulated a scathing memo, written by Deputy Attorney General Rod Rosenstein, criticizing Comey's handling of the Clinton probe, including the director's decision to hold a news conference announcing its findings and releasing "derogatory information" about Clinton.
Since Attorney General Jeff Sessions recused himself from the bureau's Trump-Russia probe, Rosenstein has been in charge.
Comey was speaking to agents at the FBI's field office in Los Angeles when the news of his firing flashed on TV screens, according to a law enforcement official who was there. Comey initially chuckled, then finished his speech, said the official who spoke to The Associated Press on condition of anonymity because the official wasn't authorized to discuss the situation publicly.
Comey later left on a plane to return to Washington.
Democrats slammed Trump's action, comparing it to President Richard Nixon's "Saturday Night Massacre" decision to fire the independent special prosecutor overseeing the Watergate investigation in 1973, which prompted the resignations of the Justice Department's top two officials.
The Democrats expressed deep skepticism about the stated reasons for Tuesday's firing, raising the prospect of a White House effort to stymie the investigations by the FBI and congressional panels.
"This is Nixonian," Sen. Bob Casey, D-Pa., declared on Twitter. "Outrageous," said Oregon Sen. Ron Wyden, calling for Comey to immediately be summoned to testify to Congress about the status of the Trump-Russia investigation. Rep. Adam Schiff of California, top Democrat on the House intelligence committee, said the White House was "brazenly interfering" in the probe.
Republican Sen. John McCain of Arizona said Congress must form a special committee to investigate Russia's interference in the election.
Trump will now appoint Comey's successor. The White House said the search for a replacement was beginning immediately. Comey's deputy, Andrew McCabe, takes over in the interim.
Trump has ridiculed the investigations as a "hoax" and has denied that his campaign was involved in Russia's meddling. In his letter to Comey, he asserted that the FBI director had informed him "on three separate occasions that I am not under investigation."
(With agency Inputs)