The company narrowly missed demotion in the last quarterly reshuffles in June and September.
The Bradford-based chain had been in the list for more than 14 years but its share price has tumbled in line with falling sales.
Its share price has fallen around 17% this year.
It currently has a market capitalisation of around £3.51bn.
The final decision on Morrisons demotion was made by the London Stock Exchange by the end of trading on Wednesday based on the previous day's closing price.
The move into the FTSE 250 is likely to trigger share sales by tracker funds which only follow the UK's biggest companies.
Russ Mould, investment director at AJ Bell wrote: "Morrisons' check-out from the FTSE 100 after fourteen and a half years shows the importance of pricing power.
"German discounters have come in and undercut the established big grocery chains, while the internet and changes in shopping habits have also altered the industry landscape ...More than 14 years is a good stint in the FTSE 100 and it is worth noting that only around 30 of 1984's original constituents are still in the benchmark index, showing just how tough life can be at the top."
Other companies which have fallen out of the FTSE 100 include the security group G4S and the engineering group, Meggitt.
The new intake were also announced and include the payment processor, Worldpay, Provident Financial and Irish Services Company, DCC.
Morrisons' new chief executive, David Potts has been trying to turn the supermarket group's fortunes around in a tough trading environment.
Last month it announced a 2.6% drop in sales for the three months to November, prompting a further fall in its share price.
In March, the company reported a 52% drop in annual profits to £345m, its worst results in eight years.
Morrisons is the fourth-largest supermarket chain, trailing Tesco, Sainsbury's and Asda in annual sales.
Its struggles reflect wider problems within the sector, which has seen price wars among the big four supermarket chains following the growth of discount chains such as Aldi and Lidl.
In September, Morrisons announced it was selling 140 loss-making "M" local convenience stores in a £25m deal and closing 11 stores, as it sought to concentrate on larger sites.
Supermarket chain Morrisons has fallen out of the FTSE 100 following a sharp drop in its share price amid concerns about its recovery plans.