Natuman was voted out after three MPs crossed the floor to pass a no-confidence motion on Thursday afternoon.
Sato Kilman, who was sacked as foreign minister last week, has been appointed the new prime minister.
He won the parliamentary vote, beating opposition MP Ham Lini 28-22.
Analysts said the government’s response in the wake of Cyclone Pam, which devastated the country in March, was one of the reasons behind the no-confidence motion.
“There is a fairly strong voice in the community that felt the Natuman government didn’t do the best possible job,” said Tony Wilson, editor of the Vanuatu Independent newspaper.
“There will be people in the community rejoicing and feeling that the relief situation may be in better hands.”
Kilman will serve his third term as prime minister with Moana Carcasses as his deputy.
“Ironically, it was Moana Carcasses who opposed Sato Kilman last time in 2013,” Wilson said.
Vanuatu has been rocked by regular parliamentary motions of no-confidence in recent years.
Wilson said the instability in Vanuatu politics was likely to continue.
“We will reach a stage next year where it would be politically unwise to put motions forward as we get closer to the next national election,” he said.
“But I’d say there’s probably at least one more window of opportunity for another motion before the end of this year.”
Vanuatu’s new deputy prime minister has defended the ousting of the Joe Natuman-led government.
Moana Carcasses was one of the prime movers of the motion of no confidence.
Apart from Natuman’s handling of cyclone relief, another reason cited for his ousting include the suspension of 19 opposition MPs from parliament last year over allegations that Carcasses gave the MPs US$10,000 each to support a motion against Natuman.
Carcasses has always maintained that the money exchange was a loan.
As a court case to decide the issue goes to trial this week, he says the subsequent suspension of MPs was undemocratic.
“It’s my money, I can dispose of my money as I wish. It’s not government money or whatever. It’s not Joe Natuman’s money. It’s my money.
“I decided to make some loans for my MPs in the opposition. I don’t see why he suspended us, he’s wrong. Anyway, the court will rule on that.”
Other reasons given for ousting Natuman include alleged neglect of the private sector, lack of vision for developing the economy and mismanagement of aid distribution following Cyclone Pam.
“Many things went to his constituency in Tanna in particular his area,” Carcasses claimed. “So there was lots of politics in how to share that relief. Many, many complaints if you listen to the radio every day, people are complaining about how the government has managed the relief.”
Carcasses has also questioned the whereabouts of money earned from the Natuman government’s Hong Kong-based scheme for selling Vanuatu honorary citizenship.