"With deep regret I have this morning written to the Prime Minister & tendered my resignation. I can no longer support Govt policy on #Gaza," the Pakistani-origin Foreign Office and faith and communities minister wrote on Twitter.
43-year-old Warsi, who was previously chairman of the Conservative Party, became the first female Muslim Cabinet minister when David Cameron took over as Prime Minister in 2010.
In a later reshuffle, she was demoted to the middle- ranking post in the Foreign Office.
She said the decision "has not been easy" but there is "great unease" within the Foreign Office over "the way recent decisions are being made".
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In recent days, she had used Twitter to ask for details of protests, and in one message wrote: "Can people stop trying to justify the killing of children. Whatever our politics there can never be justification, surely only regret."
One of the five daughters of Pakistani immigrants, Lady Warsi grew up in Dewsbury, West Yorkshire, and studied at Leeds University, later working for the Crown Prosecution Service before setting up her own legal practice.
Gaza officials say the four-week conflict has killed nearly 1,900 Palestinians.
Warsi has repeatedly said on Twitter that more international action was needed to end the crisis.
Conservative MPs have been calling on Cameron to take a more robust line with Israel amid concerns its actions are disproportionate.
Cameron yesterday said UN Secretary General Ban Ki-moon was right in speaking out against an Israeli attack near a UN-run school in Gaza.
However, he did not say if he agreed that it had been "a moral outrage and a criminal act".
Reacting to the resignation, Deputy Prime Minister Nick Clegg said it was no "secret" that there were different opinions over Gaza within the government and that Warsi had "strong views" on the subject.