A senior official told AFP the resignation of premier Ibrahim Mahlab's administration aimed to "pump new blood" into the government after the arrest on Monday of agriculture minister Salah Helal on suspicion of taking bribes.
The presidency said Sisi asked outgoing oil minister Sharif Ismail to form a new cabinet within a week.
Media had reported an impending reshuffle after Helal's arrest following his resignation in connection with an investigation into corruption.
Helal and his chief of staff were accused of having "requested and received" bribes from a businessman, via an intermediary, to legalise the purchase of state property.
The government had denied reports of an impending reshuffle, and said no other ministers had been implicated in the corruption case.
But there have growing calls for Mahlab's resignation and increasing protests by civil servants over a new law that centralises promotions while taxing bonuses.
"The main reason was the president was displeased with the job of some ministers, and his feeling that the government wasn't achieving what he wanted, especially in light of complaints by citizens regarding services," said Mostafa Kamel al-Sayyed, a Cairo University political science professor.
Mahlab's resignation comes as Egypt prepares to hold long-delayed legislative elections in two phases between October 17 and December 2.
- Discontent over prices -
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The elections had initially been scheduled for early 2015 but were cancelled by a court on technical grounds.
Mahlab, who had headed the Arab Contractors construction firm, had been appointed by interim president Adly Mansour in March 2014, less than a year after the army toppled Islamist president Mohamed Morsi.
He was viewed as a capable technocrat close to Sisi, the former army chief who removed Morsi and won the presidential election in May that year.
Ismail, who has experience in state-owned petroleum companies, had been the managing director of Ganoub El Wadi Petroleum Holding Company before his appointment as oil minister in July 2013 following Morsi's overthrow.
Morsi's removal and detention unleashed a deadly crackdown on Islamists that killed hundreds of protesters, and the army has struggled to quash a jihadist insurgency in the Sinai Peninsula.
The government had enjoyed support in the face of militants who have killed hundreds of soldiers, but in recent months had come under fire for corruption and the unpopular civil service law.
There has also been growing discontent over a rise in food prices and slashes to a generous fuel subsidy system as Sisi pushes to narrow a budget deficit.
Sisi has been able to pass decrees virtually unchecked in the absence of a parliament, including the subsidy cuts that previous governments had shirked to avoid unrest.
The new parliament, expected to begin work by the end of the year, will review those laws.
However, it is unlikely to present the president with any sustained opposition and will probably be dominated by Sisi loyalists and weak and fractured political parties that have generally backed him.
The previous parliament, elected in 2011 after an uprising ousted veteran president Hosni Mubarak, had been dominated by Morsi's Muslim Brotherhood movement.
The Islamist group was banned after Morsi's overthrow in July 2013, and thousands of its members, including top leaders, have been jailed.