President Joyce Banda of Malawi.
Several officials have been caught allegedly with money hidden under their beds and in their cars, reports the BBC's Raphael Tenthani from Malawi. Last month, top finance ministry official Paul Mphwiyo, who was seen as an anti-corruption crusader, was shot and wounded, our reporter says.
Western donors have been urging Ms Banda to tackle corruption.
Malawi is a poor African state, heavily dependent on financial aid from the European Union (EU) and other foreign powers.
'High levels of fraud'
Ms Banda's office said a new cabinet would be appointed in due course, without elaborating.
She called a crisis meeting of the cabinet before her office announced that it had been dissolved, our reporter says.
At a news conference on Wednesday, Ms Banda said she had appointed a special team, made up of police and government officials, to do a financial audit across all government departments.
Our reporter says the shooting of Mr Mphwiyo opened a can of worms with the media awash with reports of unscrupulous civil servants conniving with businessmen to fleece the government of million of dollars through dubious contracts.
Mr Mphwiyo, the budget director in the finance ministry, was shot as he drove into his residence in the upmarket Area 43 suburb of the capital, Lilongwe, on 13 September.
The shooting was "attack aimed at silencing him and the government in the fight against high levels of corruption and fraud", Ms Banda's office said at the time.
Four suspects were arrested over the shooting, our reporter says.
About 10 junior government officials have been arrested so far for suspected corruption, Reuters News agency reports.
Courtsey of BBC News