(CNN) — Secretary of the Navy John Phelan was ousted from his position, six sources familiar with the matter told CNN, as Pentagon spokesman Sean Parnell announced Wednesday evening that Phelan would be departing “effective immediately.”
Three of the sources said that Phelan was given the option to either resign or be fired. It was not immediately clear which he chose.
The Navy directed queries about the details of Phelan’s departure to the Office of the Secretary of Defense, which did not immediately respond to a request for comment. The White House directed CNN to a statement from Parnell.
“On behalf of the Secretary of War and Deputy Secretary of War, we are grateful to Secretary Phelan for his service to the Department and the United States Navy,” Parnell said in an internet post. “We wish him well in his future endeavors. Undersecretary Hung Cao will become Acting Secretary of the Navy.”
The announcement comes while the U.S. Navy is carrying out a blockade of Iranian ports during a ceasefire in the Iran war. Thus far, U.S. forces have redirected 29 vessels to return to port and have also boarded two ships.
Multiple sources told CNN there was tension for months between Phelan and Defense Secretary Pete Hegseth, who believed he was moving too slowly on implementing shipbuilding reforms and was also irked by Phelan’s direct communication with Trump, which Hegseth viewed as an attempt to bypass him. Deputy Defense Secretary Steve Feinberg also wanted to take control of major responsibilities for shipbuilding and navy acquisitions, a job that would typically be within Phelan’s purview.
Phelan is a businessman with no prior military service; he and his wife previously fundraised millions of dollars for President Donald Trump’s campaign before he was confirmed as Navy secretary in 2025.
“John will be a tremendous force for our Naval servicemembers, and a steadfast leader in advancing my America First vision,” Trump said at the time. “He will put the business of the U.S. Navy above all else.”
It’s unclear what led to Phelan’s departure, which is the first among the military service secretaries nominated under Trump. Defense Secretary Pete Hegseth has, however, removed numerous senior military officers across the services since taking the helm at the Pentagon.
The announcement of his departure comes the same week as a major, annual maritime conference — the Navy League’s annual Sea Air Space conference — was being held just outside of Washington, D.C. Phelan and other senior Navy leadership attended and spoke at the conference.
CNN previously reported that Phelan’s name appeared on a flight manifest showing that he flew in 2006 on the plane of convicted sex offender Jeffrey Epstein. The manifest showed Phelan flew with Epstein; several other financiers; and one passenger who appeared to be French modeling agent Jean-Luc Brunel, a close associate of Epstein who was facing charges of rape of a minor and sexual assault when he was found dead in his prison cell in 2022.
A close friend of Phelan’s said he had been invited to fly on the plane by Bear Stearns CEO Jimmy Cayne, who died in 2021. Phelan did not know they’d be flying on Epstein’s plane until they arrived, the close friend said, and Phelan did not speak or interact with Epstein again.
CNN’s Kristen Holmes and Kaitlan Collins contributed to this story.
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