It would now go to the Labour Party to consider whether to expel him as a party member.
He will now sit in Parliament as an independent MP. Sharma is still a member of the wider Labour Party, although it is now very likely he will be expelled from that too.
Labour's caucus has referred the matter to the party's governing council, which will decide whether to expel him from the party entirely.
Ardern said where possible it was best to avoid byelections because of the cost and disruption of them.
If he is expelled from the Labour Party, he will no longer be eligible for selection as Labour's candidate in his seat at the next election - although the chances of Labour selecting him again are already slim.
She said Labour would assign an MP as a caretaker for Hamilton West to take care of constituents who did not want to go to Sharma.
Ardern said the new system that was put in place to deal with MPs who had staffing problems would now be reviewed to see if it could be improved. She said one of the problems was that it was a very prolonged process.
Sharma has said he was battling with the whips over it for a year and a half. Ardern said a new conduct commissioner could help in future cases such as this. The Speaker has announced Lyn Provost as that commissioner.
Ardern said up until two weeks ago Sharma had had friends in the caucus so she was not surprised there was an abstention
Ardern said Sharma was expelled for "his repeated and calculated breaches of caucus rules over the past 12 days".
Ardern said the party had been initially concerned for his wellbeing and offered support following Sharma's decision to go public with allegations of bullying.
On Tuesday, Sharma was suspended from caucus, but Ardern left the door open for him to return if he changed his behaviour. She said the caucus would reconsider the suspension in December.
"We offered mediation and a pathway back for him," Ardern said.
However, Sharma persisted and leaked a secretly recorded phone conversation, saying his suspension had been "predetermined" by the caucus and alleging the Prime Minister had lied when she said his suspension was not predetermined at a secret meeting of Labour MPs the night before.
"Despite providing an opportunity to resolve his issues and to rebuild trust, he has repeatedly demonstrated that he no longer wishes to be a member of the caucus. His consistent and ongoing breach of the caucus rules has resulted in the complete loss of trust by his fellow Labour MPs," Ardern said.
The motion to suspend Sharma last week had been unanimous, but the vote to expel him was not.
Of Labour's 65-member caucus, 62 MPs voted. One MP voted against expulsion, and another abstained. The rest voted in favour. Sharma was allowed to vote.
Ardern said there were "definitely things to be learned from this episode, but none of it justifies the recent behaviour of Gaurav".
Labour is considering support for MPs who are temporarily prevented from hiring staff, as well as ways of resolving disputes between MPs.
Sharma opted to attend the meeting. He had skipped last week's meeting to suspend him.
Sharma said Ardern, who chaired the meeting, had offered him the opportunity to speak first, which he took.
He then spoke again after other MPs had spoken.
Sharma said other MPs had made their points respectfully. The former chief whip at the heart of Sharma's allegations, Kieran McAnulty, had not spoken.
Asked if he had apologised at any point, Sharma said if he had broken people's trust he apologised for that but that it was a result of what he felt he had been put through.
"It's not easy walking into a situation like this. But at the end of the day, I don't have anything to hide. I wanted to put my point forward," Sharma said.
Ardern's office moved quickly to refute allegations made by Sharma that ministers had been avoiding the Official Information Act (OIA).
Sharma had alleged backbench MPs were coached on how to raise issues with ministers in their capacity as Labour MPs and party spokespeople rather than as ministers of the government. MPs and parties are not subject to the OIA, whereas ministers are.
Ardern's chief of staff Raj Nahna wrote to Chief Ombudsman Peter Boshier after Boshier had requested further information about Sharma's allegations.
Nahna said Sharma had "misrepresented" the coaching session.
"The workshop was part of a series of regular development opportunities for MPs on a range of matters such as electorate visits, parliamentary process, and interactions with the media," he said.
Nahna said the meeting was "not dedicated" to the OIA, rather it was about the roles of the Labour Leader's Office and Ministerial Offices and how the two could help MPs.
Nahna said one MP had asked about what information was covered by the OIA and what was not. The question was answered by an example of an MP who sent information to a minister's office that was released in an OIA. The example was used to impress upon MPs how to "manage sensitive information from their constituents".
Nahna said the Government was committed to its obligations under the OIA and cited figures showing that despite a 110 per cent increase in the volume of OIA requests since 2016, 97.3 per cent were being completed on time, compared with 91.1 per cent in June 2016.
