Egypt's military has suspended the Islamist-backed constitution, called early elections and announced that embattled President Mohammed Morsi will be replaced.
Cheers erupted among millions of protesters nationwide who were demanding Morsi's ouster.
The move comes after the military set a deadline for Morsi to either work things out with protesters or step down.
According to several media accounts, dozens of people have been killed since Sunday in violence between opponents and supports of Morsi, who took office in June last year as Egypt's first freely elected leader.
In a television address early Wednesday morning, Morsi ignored massive protests calling for him to resign, reminding Egyptians of his election and about the need to protect his constitutional legacy.
The statement showed that Morsi and his Muslim Brotherhood — who sought power for 80 years before obtaining it last year — were prepared to run the risk of challenging the army.
Although Morsi remains popular among Islamist supporters, many other Egyptians are angry over what they see as efforts to impose religious controls through the Muslim Brotherhood, and Morsi's failures to deal with the country's multiple problems, including a devastated economy.
More to come
With files from The Associated Press