Joe Hockey, Eric Abetz, Ian Macfarlane and Kevin Andrews have all been dumped from Cabinet, as new Prime Minister Malcolm Turnbull promotes his supporters and women to senior roles.
Treasurer Mr Hockey will go to the backbench, with Social Services Minister Scott Morrison to take over the portfolio, as expected.
Employment Minister Eric Abetz was also relegated to the backbench and his job will be taken over by Michaelia Cash.
She is one of several women being promoted to Cabinet.
Kelly O'Dwyer will be the new assistant treasurer and small business minister.
Mr Turnbull heralded the changes as a "process of renewal".
"As you will have gathered there are some very big changes in the Cabinet, there are now five women in the Cabinet," he said.
"[The] introduction of new talent means that ... others have to leave. One of the great challenges for any leader is to ensure that there is renewal.
"That ... we are able to bring up new talent, new faces, into leadership positions over time, and that often means, that invariably means in fact, that very capable people have to move on stand aside so that others can come through. And that's tough, for everybody concerned. "
Despite the business sector's praise of Bruce Billson's carriage of the small business portfolio, he will now be on the backbench.
Assistant Treasurer Josh Frydenberg will be the new minister for resources, energy and northern Australia, with the former portfolio holder Ian Macfarlane dumped.
Marise Payne will become the nation's first female defence minister, taking over the role from conservative Kevin Andrews.
In another first, Ken Wyatt will become Australia's first Indigenous Government frontbencher taking up the role of assistant health minister.
Key Turnbull-backer Arthur Sinodinos was given the role of cabinet secretary, where he can wield significant influence across the Government.
Another Turnbull lieutenant Scott Ryan will be the assistant Cabinet secretary.
Mr Turnbull announced outgoing Treasurer Mr Hockey told him he would not seek a frontbench role.
"Earlier today the Honourable Joe Hockey told me that he would not be seeking a place in the new ministry and it was his intention to resign from the Parliament in due course," he said.
"Joe has made a long and distinguished contribution to our nation's Government and Parliament over many, many years, for which I thank him."
Mr Hockey released a statement saying: "I advised the Prime Minister that I did not wish to continue as a minister in the Government."
"I will have more to say in due course, but for the sake of my young family — to whom I owe so much — I have decided to bring my parliamentary career to a close," he said.
Progressive senator Simon Birmingham was given Christopher Pyne's education portfolio, who will remain in Cabinet as Industry Minister.
Mr Pyne's full title will now be minister for industry, innovation and science, a position Mr Turnbull spoke on in his announcement.
"Christopher is going to be at the centre as is the whole Government of one of our most important agendas," he said.
"If we want to remain a prosperous, first-world economy [with] generous social welfare safety net, we must be more competitive, we must be more productive, above all we must be more innovative.
"We're not seeking to proof ourselves against the future: we are seeking to embrace it. And this is a Government and a ministry that has that as its focus."
Mitch Fifield's success as a junior minister and key role in helping Mr Turnbull marshal the numbers was rewarded with a promotion to Cabinet as minister for communications and the arts.
Peter Dutton, who prominently supported Mr Abbott in the leadership spill, will remain as Immigration Minister.
Rising star Christian Porter will take over the Social Services portfolio made vacant by Mr Morrison's promotion.
Foreign Minister Julie Bishop, Infrastructure Minister Warren Truss, Environment minister Greg Hunt and Health Minister Sussan Ley are among the senior members of Government who will remain in their current positions.