Buffett's move, revealed in a regulatory filing today, was not unexpected. He told CNBC this month that his investment in the supermarket giant was "a huge mistake by me."
Buffett's stake is down from 3.2 percent earlier this week and 5.1 percent last year.
The sale comes as Tesco investigates why half-year profit was overstated by 250 million pounds (USD 407 million). Eight executives have been swept up into the probe.
Tesco, one of the world's largest retailers, has issued a series of profit warnings, and its stock price has fallen by about 50 per cent in the past year as it struggles to compete with low-cost rivals.