The ruling Justice and Development Party's (AKP) failure in Sunday's polls to keep its parliamentary majority for the first time since it came to power in 2002 has left the country facing either a coalition government or snap elections.
Erdogan hosted Prime Minister Ahmet Davutoglu for an hour of closed-door talks inside the vast new presidential palace in Ankara.
"Mr President accepted today the resignation of the cabinet that was presented by Mr Prime Minister Ahmet Davutoglu," Erdogan's office said in a brief statement.
A government source told AFP that the expected move was purely procedural and Erdogan would host Davutoglu again at a later date to discuss starting coalition talks with other parties.
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There are however no straightforward coalition options, making snap elections a real possibility.
Erdogan can call snap elections within 45 days if efforts to form a coalition are unsuccessful.
The AKP won 41 percent of the vote, followed by the Republican People's Party (CHP) on 25 percent, the Nationalist Movement Party (MHP) on 16.5 percent and the pro-Kurdish People's Democratic Party (HDP) in fourth place with 13 percent.
The result was a huge blow for the AKP which has been largely unchallenged in its political dominance of Turkey over the last 13 years.
The MHP, which shares the AKP's conservative and religious outlook would be the most natural partner, but is opposed to many aspects of the peace process with Kurdish rebels.
The CHP has bitterly denounced Erdogan as a dictator but its leader Kemal Kilicdaroglu has left open the door to a coalition, saying it would be "disrespectful" to voters to leave the country without a government.
The HDP, whose charismatic leader Selahattin Demirtas was the star of the campaign, has clearly ruled out taking part in any coalition.