Prime Minister Chris Luxon announced the decision during a ministerial reshuffle yesterday.
Ms Simmonds, the MP for Invercargill, retains her portfolios of tertiary education and the environment.
The Otago Daily Times asked Ms Simmonds to comment on the decision.
In response, she sent a written statement: "I support the Prime Minister’s decision. I am looking forward to continuing my work in tertiary education, particularly the disestablishment of Te Pūkenga, and in the environment portfolio."
She declined to comment further.
Ms Simmonds had come under fire for her handling of the disabilities portfolio.
She admitted the handling of the disability funding changes — which included restricting the way equipment and support services were funded — was bungled, and later apologised for it.
Protests were held across the country urging the minister to reconsider the funding decisions.
Dr Amy Taylor, who organised the Dunedin protest, said removing Ms Simmonds from the disabilities portfolio was the right decision.
"But it might be too little, too late. Ms Simmonds did not show herself to be an ally for the disabled community."
Social Development Minister Louise Upston will pick up disability issues.
Dr Taylor said it was up to Ms Upston to "make things right".
Ms Simmonds has said there are people who are accessing the funding for care services such as massages, hairdressers, pedicures and other appearance or therapeutic services, or for buying Lotto tickets.
Dr Taylor said those comments were "unacceptable".
"The disability community were defamed in the media. What we want is the complete reversal of the changes [to disability funding].
"We are asking the new minister to do this promptly."
The disability community wanted to see evidence of the government’s support for the portfolio in the upcoming Budget, Dr Taylor said.
"Until then, we will continue to advocate for what is right."
Labour leader Chris Hipkins said Mr Luxon had taken more than a month to show any leadership for the disability community and take the portfolio away from Ms Simmonds.
"The penny has finally dropped for Christopher Luxon.
"It’s taken a while but he has finally sacked his Minister for Disability Issues after she blindsided carers with changes to their funding flexibility — effectively cutting their financial support."
Meanwhile, Mr Luxon also announced Melissa Lee would be demoted from Cabinet, and lose her media and broadcasting portfolio.
Ms Lee was under pressure after Warner Bros Discovery announced it would stop producing local news through Newshub, and shutter the majority of its operations in New Zealand.
She faced repeated questions about what the government would do about the closure of Newshub, and Labour said she had "more than enough time" to find solutions.
Justice Minister Paul Goldsmith will pick up the media and broadcasting portfolio.
Ms Lee retained her economic development, ethnic communities and associate ACC roles as a minister outside Cabinet.
— Additional Reporting RNZ
