Yahoo confirmed in a statement saying Thompson "has left the company".
Meanwhile, Ross Levinsohn, Yahoo media chief will be the interim CEO, said the company.
The shocking details of Thompson padding up his educational details came to light after activist hedge fund Third Point allegedly accused that the former lied about his educational details.
Reports reveal that Roy Bostock, Yahoo Chairman and four other directors, who already announced their plans to step down later this year will now leave the board immediately. Activist hedge fund manager Daniel Loeb and two of his allies, turnaround specialist Harry Wilson and former MTV Networks executive Michael Wolf, are expected to fill their shoes. While Alfred Amoroso, a veteran technology executive, will succeed to Bostock's throne.
The matter on Thompson's fake educational credentials was exposed in a letter written by Third Point's founder and chief executive, Dan Loeb to the Yahoo board.
In his letter, Loeb said, "Stonehill College informed us that it did not begin awarding computer science degrees until 1983 - four years after Mr Thompson graduated."
Reiterating that it was an "inadvertent error", Yahoo in its statement said, "Scott Thompson received a bachelor of science degree in business administration with a major in accounting from Stonehill college. There was an inadvertent error that stated Mr Thompson also holds a degree in computer science."
The internet giant was on a downslide ever since former Chief Executive Carol Bartz was fired. Last year also saw Yahoo’s revenue going downhill by more than a fifth after Thompson, who is PayPal's former president joined on board as Chief Executive in January.