The Swiss-based Society of Saint Pius X (SSPX), whose four bishops were excommunicated from 1988 to 2009, said on Wednesday it took the step because Williamson had disobeyed his superiors.
Williamson, 72, an opponent of recent SSPX efforts to win full reintegration into the Church, caused an international uproar with his ultra-hardline views broadcast only days before the Vatican lifted the bans on him and three other bishops.
His presence in the SSPX leadership appeared to be a hurdle to any accord with the Vatican. But negotiations have broken down in any case so his departure may have little effect on the group's relations with Rome.
The statement said Williamson was excluded for "having distanced himself from the management and the government of the SSPX for several years and refusing to show due respect and obedience to his lawful superiors."
The World Jewish Congress (WJC) welcomed the step but said it was "too little, too late" to restore credibility to the SSPX, which it said had done little to combat anti-Semites in its ranks who consider Jews "the embodiment of the anti-Christ."
"This is a decision the SSPX leadership should have taken years ago," WJC President Ronald Lauder said. "The reasons now given for Williamson's dismissal do not mention the damage this man has caused by spreading invective against Jews and others."
The Vatican declined to comment on the SSPX statement, which said Williamson was excluded by the group on October 4.
The SSPX opposes modernizing reforms decided by the 1962-1965 Second Vatican Council. In his bid to end its schism, Pope Benedict has promoted the old Latin Mass the SSPX champions and lifted the excommunication bans on its bishops.
But talks aimed at creating a special status for the group within the Church have broken down because it has refused to accept the Council as legitimate, especially its recognition of other Christian denominations and Judaism as valid faiths.
Fined for publicly denying Holocaust
Williamson's denial of Holocaust gas chambers in a television interview in January 2009, just before the excommunication bans were lifted, sparked a wave of criticism from Catholics and Jews.
Even German Chancellor Angela Merkel called on the Vatican to distance itself from him. The Vatican ordered Williamson to recant his denial but he apologized only for any misunderstanding he had caused.
Soon after his interview, Argentina – where Williamson was head of an SSPX seminary at the time – asked him to leave the country and he returned to his native Britain.
A German court later fined Williamson for publicly denying the Holocaust took place, which is a crime in Germany.
The Williamson affair was also embarrassing because it showed how isolated the Vatican was in the Internet age.
In an unprecedented letter to Catholic bishops, Benedict admitted he did not know Williamson's far-right wing views despite the fact the bishop had published them on the Internet.
The Vatican would use the Internet more in future, he said.
Since that uproar, Williamson has sent emails regularly to his followers criticizing the society's efforts to reach an accord with the Vatican, despite an order by SSPX leader Bishop Bernard Fellay to remain silent.