Secretary of the Navy John Phelan was ousted from his position Wednesday, six sources familiar with the matter told CNN, amid tension Defense Secretary Pete Hegseth over his implementation of shipbuilding reform and his close relationship with President Donald Trump.

Pentagon spokesman Sean Parnell said Wednesday evening that Phelan would be departing “effective immediately” — a surprise announcement that came even while the US Navy is carrying out a blockade of Iranian ports during a ceasefire in the Iran war. Earlier, Hegseth had a conversation with Trump and informed Phelan he needed to resign or be fired, two sources familiar with the matter said.

“President Trump and Secretary Hegseth agreed new leadership at the Navy is needed,” one of the sources, a senior administration official, told CNN.

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 a post on X. “We wish him well in his future endeavors. Undersecretary Hung Cao will become Acting Secretary of the Navy.”

The announcement was particularly shocking for its timing, with the Navy playing a critical role in stopping Iranian ships from traversing the Strait of Hormuz. Thus far, US forces have redirected 31 vessels to return to port and have also boarded two ships.

Multiple sources told CNN there was tension for months between Phelan and Hegseth, who believed Phelan 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.

It was during a meeting between Trump and Hegseth on shipbuilding at the White House Wednesday that the issues came to a head, according to a senior White House official.

Trump, frustrated by slow shipbuilding progress himself, became convinced during the meeting that Phelan needed to be replaced, and he and his defense secretary resolved to install someone who would move more quickly, the official said. Trump told Hegseth to “take care of it,” because Phelan is subordinate to the defense secretary. Hegseth sent a message to Phelan informing him he needed to resign or be fired, the official said.

The official said Phelan, though, did not appear to believe Trump was aware of the message, and he soon began phoning other White House officials asking if they had heard he had been told to resign and whether they knew if the president was aware of it. It was around then that Parnell issued the statement, the official said.

At least two White House staffers told Phelan the decision was Trump’s, the official said. But Phelan still sought confirmation from the president himself or someone close to him, coming to the White House grounds and looking for officials in the Eisenhower Executive Office Building with whom he had relationships, asking if they had any information, the official said.

Phelan then asked to meet with Trump and went to the West Wing lobby, the official said, and Trump met with him briefly, confirming that Phelan was out of a job.

Phelan is a businessman with no prior military service; he and his wife previously fundraised millions of dollars for 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 US Navy above all else.”

Phelan’s departure is the first among the military service secretaries nominated under Trump. 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, DC. 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)

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