Poland-born Krysztof Charamsa, 43, said he wanted to challenge the Church’s “backwards” attitude to homosexuality.
Father Charamsa said he was in a relationship and was “happy and proud” of his identity.
The Vatican called his actions “very serious and irresponsible” and stripped him of doctrinal responsibilities.
Father Charamsa’s statement came as bishops arrived in Rome for a synod that will discuss homosexuality, among other issues.
In an interview with the Corriere Della Sera, Mr Charamsa, said: “It’s time the Church opened its eyes and realised that offering gay believers total abstinence from a life of love is inhuman.
“I also know that I will have to give up the ministry,” he added, but said he felt he had a duty towards sexual minorities to come out.
He has been a member of the Congregation for the Doctrine of the Faith – which is tasked with defending Church doctrine – since 2003.
The Vatican said he would no longer be able to be a member of the body, while his future as a priest would be decided by a local bishop.
In a statement it said: “The decision to make such a pointed statement on the eve of the opening of the synod appears very serious and irresponsible, since it aims to subject the synod assembly to undue media pressure.”
Source : bbc.com