Burke, who is the seniormost American prelate in the Vatican, said in an interview earlier that many Catholics felt that the "Church was like a ship without a rudder."
Burke was stripped of the headship of the Supreme Tribunal of the Apostolic Signatura, the highest judicial authority in the church, and instead named as patron of the Sovereign Military Order of Malta, an honorific post.
Burke was replaced as cardinal prefect of the tribunal by Dominique Memberti, a Frenchman, a Vatican statement said.
Burke ruffled feathers in December 2013 by questioning Pope Francis's liberalising attitude towards towards divorce, remarriage and homosexuality.
He was however invited by the pope in October to attend a synod where he fiercely opposed any change in the Church's stance on these and other sensitive social issue.
The spiritual leader of the world's 1.
