Zanu-PF appointed ex-Vice-President Emmerson Mnangagwa, who was fired by Mr Mugabe two weeks ago, in his place.
The party has given Mr Mugabe, 93, until 1000 GMT on Monday to resign as president, or face impeachment.
The military intervened last week, reportedly to block him from installing his wife as his successor.
The first lady, Grace Mugabe, has been expelled from the party altogether.
Mr Mugabe is set to meet military leaders on Sunday and a motorcade has been seen leaving his private residence.
Tens of thousands of Zimbabweans attended street protests on Saturday, demonstrating against the Mugabes.
BBC correspondent Andrew Harding, who has been at the Zanu-PF meeting, said cheering erupted as the decision was announced.
One senior official later told him: “It’s the dawn of a new era. Mugabe can go farming.”
The move has yet to be formalised, but it increases further the pressure on Mr Mugabe that has been building over the past few days.
The recent events:
Two weeks ago Mr Mugabe sacked his then-deputy Mr Mnangagwa, who then fled the country
The army’s chief of staff, Gen Constantino Chiwenga, warned last Monday that the military might intervene to stop purges in the party – and was roundly criticised by allies of the Mugabes
On Wednesday, soldiers seized the headquarters of the national broadcaster
Mr Mugabe has been mostly under house arrest for several days
On Saturday, unprecedented mass protests further weakened Mr Mugabe’s position
The head of the influential War Veterans Association, Chris Mutsvangwa, threatened to “bring back the crowds and they will do their business” if Mr Mugabe did not step down.
Mr Mugabe has been president of Zimbabwe for 37 years.