The network announced the termination after earlier criticizing the photos as "disgusting and offensive."
Griffin posted a videotaped apology on Tuesday night amid a public outcry from Republicans and Democrats alike over the images, including condemnation from Trump.
"Kathy Griffin should be ashamed of herself," Trump wrote. "My children, especially my 11-year-old son, Barron, are having a hard time with this. Sick!"
The U.S. Secret Service, responsible for presidential security, has opened an inquiry into the posting of Griffin posing with the severed-head replica, a spokesman in Los Angeles said when asked whether the agency was looking into the incident as a potential threat on the president's life.
"We're aware of it and we're investigating it," the spokesman, George Fernandez, told Reuters. He declined to elaborate.
Griffin, 56, a two-time Emmy-winning performer known for her deliberately provocative brand of humor, has appeared since 2007 as co-host of CNN's New Year's Eve broadcast from Times Square in New York with anchor Anderson Cooper.
CNN did not make clear whether it was cutting its New Year's Eve deal with Griffin for just the upcoming 2017 broadcast or for good.
The furor also cost Griffin a show at the Route 66 Casino Hotel outside Albuquerque, New Mexico. Management of the Laguna Pueblo tribe-operated establishment decided to cancel a one-night appearance by Griffin scheduled for July 22, a spokesman said.
Griffin apologized profusely in a video message posted to her official Twitter account late on Tuesday, saying that as a comic she routinely seeks to "cross the line" but realized in this case, "I went too far."
"The image is too disturbing. I understand how it offends people. It wasn’t funny. I get it," she said, adding that she was seeking to have the images taken down from social media.
"I beg for your forgiveness," she concluded. "I made a mistake and I was wrong."
'VILE AND WRONG'
Celebrity news website TMZ published a behind-the-scenes video on Tuesday of Griffin posing with the model head for a photo shoot. She was seen reviewing the photos with photographer Tyler Shields and jokingly saying, "We have to move to Mexico today because we're going to go to prison, federal prison."
TMZ posted an image from the shoot on Twitter.
"This is vile and wrong," Chelsea Clinton, daughter of former President Bill Clinton and former Secretary of State Hillary Clinton, wrote on Twitter. "It is never funny to joke about killing a president."
Trump's oldest son, Donald Trump Jr., called on sponsors of Griffin to condemn the comedian.
Griffin's firing from the CNN show drew widely divergent reactions, with one Twitter follower, Anand Elgie, calling her termination "over reaction," adding: "she had a bad moment of judgment... Trump bring out the worse in us all."
Another, Mark Dice, said CNN should have acted sooner. "The fact that you waited this long proves your network endorses the assassination of our president. You are the enemy of the people!!!"