He became a focal point earlier this year when CIA leaders raised concerns about him with Trump's national security adviser H.R. McMaster.
McMaster moved to replace him, but Cohen-Watnick appealed to Trump's top advisers, Steve Bannon and Jared Kushner, who got Trump to intervene to save his job.
A statement Wednesday says "General McMaster appreciates the good work accomplished in the NSC's Intelligence directorate under Ezra Cohen's leadership."
It adds that McMaster "determined that, at this time, a different set of experiences is best-suited to carrying that work forward."