Chatterjee, second in rank after Mamata Banerjee, will be replaced by Finance Minister Amit Mitra, in a move also being seen to give a boost to industrialistation in the state.
Chatterjee will, however, continue to hold Information and Technology and Parliamentary Affairs portfolios.
Speculation was rife in political circles for some time about Mitra replacing Chatterjee after Banerjee expressed dissatisfaction over the performance of the department in review meetings.
Though Chatterjee was ostensibly removed from the post to "lesson his burden", the shake-up involving 12 ministers came on the heels of a meeting chaired by Banerjee last week when she pulled up several ministers for non-performance and failure to utilise funds.
The removal of Chatterjee, TMC General Secretary and considered second in the rank in the Cabinet followed muted criticism of his failure to draw in big-ticket investments into the state.