Wednesday morning began quietly, but by the evening Israel had a new defense minister: Benjamin Netanyahu.
Earlier this week, Liberman said there is no path to an agreement with Hamas and urged leaders to deal "the most severe blow we can".
Netanyahu will take over the defence portfolio himself, his party said.
The Hamas militant group celebrated the resignation of Israel's defense minister Avigdor Liberman on Wednesday, calling it a "victory for Gaza" and a "recognition of defeat against Palestinian resistance".
At a memorial event for Israel's first prime minister, David Ben-Gurion, and his wife, Paula, Netanyahu defended the ceasefire announcement, claiming that Hamas "begged" Israel for the ceasefire. In Israel, one person was killed in a rocket strike and three were critically wounded.
It's been a bloody week for both sides, with Israelis sneaking into Gaza for an intelligence mission Sunday that got exposed.
Four Israeli police officers have been treated for light wounds, believed to have been inflicted during a suspected stabbing incident in Jerusalem late Wednesday night.
Hamas said in a statement that the demolishing of Al-Aqsa TV was an attack on the press and "reflects the Israeli occupation's murderous mentality and exposes all its atrocious crimes, terror acts, and abhorrent violations against the Palestinian people".
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Meanwhile, Israelis in the south protested the ceasefire, with hundreds of residents blocking the road near the southern Israeli town of Sderot, often called the "bomb shelter capital of the world". "Believe me, they are precious to me, their words penetrate my heart".
"In times like these, leadership is not doing the easy thing. But in times of crisis, at a time of fateful decisions regarding security, the public at times can not be a partner to decisive considerations that must be hidden from the enemy", he added.
"At these moments, leadership is not about doing the easy thing, leadership is about doing the right thing, even if it is hard", he said.
In the two days of heavy fighting, Palestinian militants had fired 460 rockets and mortars into Israel, while Israel carried out airstrikes on 160 Gaza targets.
Lieberman said the cease-fire deal, coupled with a decision to allow Qatar to deliver $15 million in aid to Gaza last week, were too much for him to bear. Over the weekend, some Gaza neighborhoods enjoyed 8 hours of electricity, a massive triumph for many people.
Senior sources in Netanyahu's Likud party were quoted by the local media as saying that "elections are not necessarily the next step", adding that Netanyahu will initially take charge of Lieberman's portfolio.
His party, Yisrael Beiteinu, is now expected to leave the ruling coalition, which could mean bad news for Prime Minister Benjamin Netanyahu, who now controls just 61 of 120 parliamentary seats.
The party of another Netanyahu rival, Naftali Bennett, has already announced that if he is not appointed defense minister it will also quit the coalition - a move that would trigger early elections. Without Beit Hayehudi, Netanyahu's fourth government will collapse.