Rishi Sunak - who has served as chief secretary to the Treasury since the summer of 2019 - is replacing Javid in the top finance role.
Number 10 reportedly ordered him to sack his team of aides but Mr Javid rejected the terms, saying that "no self-respecting minister" could accept the condition being imposed.
Meanwhile Liz Truss, the MP for South West Norfolk who had been tipped for a demotion, kept her job as secretary of state for worldwide trade.
But investors piled into sterling in the hope Sunak - chief secretary to the Treasury and an ally of Number Ten - will deliver a more radical budget to kick-start the economy.
Karen Ward was a special advisor to former chancellor Philip Hammond during his time in Number 11 Downing Street.
Other big names leaving are Attorney General Geoffrey Cox and Northern Ireland Minister Julian Smith, who helped end the country's political stalemate.
Javid's resignation follows reports he had clashed with Johnson's powerful adviser, Dominic Cummings.
Amanda Milling was made Conservative Party chairman - a role in which she will attend Cabinet as a minister without portfolio.
Along with the ministerial exits, the reshuffle - which Downing Street insiders had predicted would be "conventional" before the row with Javid - included promotions for MPs who are highly rated by Number 10. Others were promoted, including Suella Braverman to the position of attorney general and Anne-Marie Trevelyan to the post of worldwide development secretary.
Alok Sharma was promoted from global development to become the new business secretary and he will also be minister for the Cop26 United Nations climate summit.
Newcomers at the cabinet meeting on Friday will include Anne-Marie Trevelyan, who replaces Alok Sharma as global development secretary; Amanda Milling, who is minister without portfolio and chairwoman of the Conservative Party; and Suella Braverman, who takes on the role of attorney general after the prime minister asked Mr Cox to step down.
Smith had been widely praised for helping to end political deadlock that left Northern Ireland without a regional government and assembly for three years.
But allies of the axed minister said it was "absolute crap" to suggest that Mr Johnson and Number 10 had not been kept informed of the process and details of the deal.
Although female ministers were axed in the reshuffle, Downing Street indicated that there would not be a reduction in the number of women around the Cabinet table. "This morning he told me that I need to make way for someone new", former environment secretary Theresa Villiers wrote after being sacked.