The PMDB, the country's largest party, voted to end its alliance with Rousseff's leftist Workers' Party, or PT, with immediate effect.
"From today, at this historic meeting of the PMDB, the PMDB withdraws from the government of President Rousseff," said Senator Romero Juca, the party vice president.
The meeting, broadcast live on national television, was the culmination of a long divorce with Rousseff that leaves Brazil's first female president grasping at straws as she tries to stay in power.
The vote and announcement took no more than three minutes and was accompanied by singing of the national anthem and shouts of "PT out!"
Senator Aecio Neves, who heads the PSDB opposition party and who narrowly lost to Rousseff when she won re-election in 2014, commented: "Dilma's government is finished."
"The exit of the PMDB is the last nail in the coffin," he said.
Rousseff, who is fighting recession, street protests, a mammoth corruption scandal, and the push in Congress for her impeachment, had met PMDB ministers Monday to try to convince them to stay.
But already on Monday, Tourism Minister Henrique Alves resigned, saying time had "run out" on the president.
The mostly centrist PMDB has long been an awkward partner for the Workers' Party.
But its votes in Congress, where it has 69 of the 513 lower house seats, would have been important to Rousseff in her bid to avoid impeachment, which requires two thirds of the votes in the lower house to pass.
Rousseff also fears that the PMDB's exit will encourage other coalition partners to jump ship.
Lawmakers from both the center-right Progressive Party, which has 49 deputies, and the center-left Social Democratic Party, which has 32, said their parties would meet this week on a possible split. Read more:
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