De Rugy came under pressure after pictures of him and his wife enjoying lavish champagne-and-lobster dinners and a Valentine's Day meal were published.
Francois de Rugy, who was named environment minister in September 2018, announced his departure after a week of revelations from the leftwing website Mediapart.
"The attacks and media lynching targeting my family forces me to take the necessary step back," said de Rugy, who also held the post of minister of state which made him number two in the government after Prime Minister Edouard Philippe.
Transport Minister Elisabeth Borne was appointed as France's new environment minister late Tuesday, the Elysee Palace said, however, she will not hold the post of minister of state.
De Rugy came under public pressure after Mediapart published pictures of him and his journalist wife enjoying lavish champagne-and-lobster dinners and a Valentine's Day meal while he was speaker of parliament in 2017 and in 2018.
The website alleged the events -- at the expense of taxpayers -- were largely social, while de Rugy contends they were part of his work representing the National Assembly.
Mediapart also revealed that de Rugy had benefited from an apartment near his hometown of Nantes in western France that was rented at a preferential rate intended for low-income workers.
Other reports have referred to a 500-euro hairdryer bought by de Rugy's wife at public expense, and a renovation of their government apartment at a cost of 63,000 euros ($70,000).
But the image of a row of plump lobsters on a platter at a function hosted by de Rugy caused the most political damage -- and many social media memes -- in a country still reeling from months of "yellow vest" protests.
The violent anti-government demonstrations have been fuelled by anger over economic inequality and claims that French leaders are out-of-touch with ordinary people.
De Rugy has denied any wrongdoing and even claimed in an interview last week that he was allergic to lobsters and didn't like champagne because it gave him a headache.
De Rugy joined Macron early in his successful bid for the presidency in 2017 and was rewarded with a series of plum jobs including parliament speaker and latterly environment minister.
But the former Green campaigner's ability to hang on to his job took a blow on Monday evening when Macron failed to give his full backing while on a trip to Serbia.
In his first reaction to the revelations, Macron said he had asked Prime Minister Philippe for "full clarity."
Borne was appointed as Macron seeks to boost his green credentials as French voters demand bolder action to address climate change.
Government spokeswoman Sibeth Ndiaye said the choice of Borne, whose portfolio was already within the ministry of ecology and solidarity transition, was "obvious".
Borne, who will remain as transport minister, tweeted that the confidence put in her by the president and prime minister was an "immense honour".
"Determined to continue the essential fight that is ecological and solidarity transition," she wrote.
Borne is Macron's third environment minister in two years -- his first appointment, celebrity environmentalist Nicolas Hulot, quit during a live radio interview in August last year, saying his cabinet colleagues were doing too little to tackle the climate emergency.
De Rugy legal threat
Mediapart, which is fiercely critical of the Macron government, specialises in investigations and has caused multiple embarrassments for politicians and senior public figures since its creation in 2008.
De Rugy said he had filed a legal complaint against the publication for defamation, accusing it of a desire "to harm, smear and destroy".
He is far from the first French politician to be accused of misusing public money.
Rightwing presidential candidate and former prime minister Francois Fillon is being prosecuted after being accused of fraudulently putting his wife on the parliament payroll for two decades.
In 2005, then economy minister Herve Gaymard resigned after he was found renting an apartment for his family in Paris at a cost of 14,000 euros a month, while junior minister Christian Blanc billed taxpayers for cigars worth 12,000 euros in 2010.
Under France's last president Francois Hollande, a senior advisor had to step down after spending a small fortune to keep his shoes shined.