The resignation of the top aide is a first stunning departure from Trump's inner circle less than a month after his inauguration.
The White House late Monday said Trump had accepted Flynn's resignation amid allegations the retired three-star general discussed US sanctions strategy with Russia's ambassador Sergey Kislyak before taking office.
"This is the internal business of the Americans, it is the internal business of President Trump's administration. This is not our business," Kremlin spokesman Dmitry Peskov told journalists.
Flynn admitted that he "inadvertently briefed" the now Vice President Mike Pence with "incomplete information" about his calls with Kislyak.
Pence had publicly defended Flynn, saying he did not discuss sanctions, putting his own credibility into question.
US media reported Monday that the Justice Department had warned the White House that Flynn had misled senior administration officials about the contents of his talks with Kislyak, and that it could make him vulnerable to Russian blackmail.
The Kremlin has previously denied that Flynn and Kislyak discussed the lifting of US sanctions.
The resignation of the top aide is a first stunning departure from the president's inner circle less than a month after his inauguration.
Flynn -- who has previously met President Vladimir Putin -- was a vocal supporter of a softer policy on Russia after ties plunged over Moscow's meddling in Ukraine and allegations of interference in the US election.