Syrian state-run television says the Cabinet has resigned as the country sees the worst unrest in decades.
President Bashar Assad accepted the Cabinet's resignation following a meeting Tuesday.
The resignation is the latest concession by the government aimed at appeasing more than a week of mass protests.
Assad is expected to address the nation in the next 24 hours to announce he is lifting the emergency law and moving to annul other harsh restrictions on civil liberties and political freedoms.
Hundreds of thousands of supporters of Syria's hard-line regime poured into the streets Tuesday to counter a wave of popular dissent that has posed the most serious threat to President Bashar Assad's rule and forced him to promise a string of reforms, including lifting a nearly 50-year state of emergency.
At least 61 people have been killed since the protests exploded on March 18 and led to a swift crackdown by security forces, according to Human Rights Watch.
Assad, whose family has controlled Syria for four decades and has a history of brutally crushing dissent, is trying to calm the growing fury with a string of concessions in this nation of 23 million.
He is expected to address the nation in the next 24 hours to announce he is lifting the emergency law and moving to annul other harsh restrictions on civil liberties and political freedoms. Syria's independent Al-Watan newspaper said the Cabinet was expected to resign during its weekly meeting Tuesday, a move that would be viewed as another concession.
However, the resignations will not affect Assad, who holds the lion's share of power in the authoritarian regime.
The violence has brought sectarian tensions in Syria out in the open for the first time in decades, a taboo topic here because the country has a Sunni majority ruled by minority Alawites, a branch of Shiite Islam. Assad has placed his fellow Alawites into most positions of power in Syria.
But he also has used increased economic freedom and prosperity to win the allegiance of the prosperous Sunni Muslim merchant classes, while punishing dissenters with arrest, imprisonment and physical abuse.
Many of the pro-regime demonstrators emphasized national unity Tuesday.
"Sectarianism was never an issue before, this is a conspiracy targeting Syria," said Jinane Adra, a 36-year-old Syrian who came from Saudi Arabia to express support for Assad.
"The Syrian people are one, there is no place for religious divisions between us," she said, flanked by her children, ages 3 and 5, carrying red roses and pictures of Assad.
Mohammed Ali, 40, said Assad was in touch with the Syrian people and aware of their need for reforms.
"This dirty conspiracy will be shortlived, we are all behind him," he said, cradling an Assad poster on his chest.
The president of 11 years, one of the most anti-Western leaders in the Middle East, is wavering between cracking down and compromising in the face of protests that began in a southern city on March 18 and spread to other areas.
The unrest in the strategically important country could have implications well beyond the country's borders given its role as Iran's top Arab ally and as a front line state against Israel.
Syria has long been viewed by the U.S. as a potentially destabilizing force in the Mideast. An ally of Iran and Hezbollah guerrillas in Lebanon, it has also provided a home for some radical Palestinian groups.
But the country has been trying to emerge from years of international isolation. The U.S. recently has reached out to Syria in the hopes of drawing it away from Iran, Hezbollah and Hamas -- although the effort has not yielded much.
The government-sanctioned rallies Tuesday dubbed "loyalty to the nation march" brought hundreds of thousands into the streets in the Syrian provinces of Aleppo and Hasakeh in the north and the central cities of Hama and Homs. School children were given the day off and bank employees and other workers were given two hours off to attend the demonstrations.
Still, many in Syria who see Assad as a young, dynamic leader and credit him for opening up the economy were shocked by the violence and came to express genuine support.
"The people want Bashar Assad!" chanted protesters in a central Damascus square. Men, women and children gathered in front of a huge picture of Assad freshly put up on the Central Bank building.
"No to sectarianism and no to civil strife," read one placard.
When unrest roiling the Middle East hit Syria, it was a dramatic turn for Assad, a British-trained eye doctor who inherited power from his father in 2000 after three decades of iron-fisted rule. In January, he said his country is immune to such unrest because he is in tune with his people's needs.