Officials at Boeing, a Chicago-based plane maker, didn't name the woman with whom Stonecipher, 68, admitted to beginning a consensual affair in January that lasted several weeks. They said only that she is a longtime Boeing employee who's still on the job.
Stonecipher is married with two children and two grandchildren.
Succeeding him as interim president and CEO is Chief Financial Officer James Bell, 56, a 32-year Boeing veteran who won't be a candidate for permanent chief.
Boeing Chairman Lewis Platt said company executives learned of the affair Feb. 25 after a worker saw correspondence between the two. Stonecipher acknowledged the affair.
Platt said the company's code of conduct does not specifically prohibit such affairs but bans conduct that might raise questions about the company's honesty, impartiality or integrity.
"The board concluded that the facts reflected poorly on Harry's judgment and would impair his ability to lead the company," Platt said.
Wall Street took the news in stride. Boeing shares, which had been trading at 31/2-year highs, dropped 8 cents to close at $58.30 on the New York Stock Exchange.
Stonecipher took over in December 2003 after then-President and CEO Phil Condit resigned amid a scandal involving the proposed deal involving Boeing 767s for use as Air Force tankers. The episode, in which a Boeing official admitted to illegal job talks with an Air Force procurement official overseeing the tanker deal, eventually landed two Boeing executives in prison: then-Chief Financial Officer Mike Sears and Darleen Druyun, the Air Force official whom Boeing later hired.
Its reputation has also been battered by the Pentagon's suspension of Boeing's rocket-launch program after the company was caught with confidential documents from Lockheed Martin, a competitor.
Stonecipher had some success in shoring up Boeing's flagging commercial-jet sales and repairing its reputation with the Pentagon. Boeing's new 787 jet, due in 2008, is off to a promising start, and the Air Force lifted the rocket ban Friday. Although tanker inquiries continue, fallout so far seems contained to Sears and Druyun, and Boeing is considered the favorite in any new tanker competition.
Stonecipher made adherence to the conduct code a centerpiece of Boeing's comeback.
After Sears was sentenced last month for his role in improperly hiring Druyun, Stonecipher wrote to company employees, "When a Boeing person, especially a senior leader, chooses to disregard either government laws or company policies, there are tremendous personal and legal consequences."
That stance may have contributed to Stonecipher's downfall, said Cai Von Rumohr, an aerospace analyst with SG Cowen, a Boston consulting firm.
Because ethics were already a concern at Boeing, he said, "The CEO had to be a level above everyone else."
Richard Koppes, a lawyer at Jones, Day in San Francisco, said: "The Boeing board should be congratulated. They are setting a precedent and demonstrating how good corporate governance works."
Stonecipher worked for 27 years at General Electric Co., rising to lead the aircraft-engine unit. He later headed aircraft-parts maker Sundstrand Corp. and became president and CEO of Mc-Donnell Douglas.
He joined Boeing after its 1997 purchase of McDonnell Douglas.
