The Vatican announced on Saturday that Francis ordered McCarrick to conduct a "life of prayer and penance" even before a church trial is held.
Breaking with past practice, Francis decided to act swiftly in the case of the emeritus archbishop of Washington DC even before the accusations can be investigated by church officials.
McCarrick was previously one of the highest, most well-known Catholic church officials in the United States and was heavily involved in the church's response to allegations of priestly abuse.
The pope has ordered McCarrick's "suspension from the exercise of any public ministry, together with the obligation to remain in a house yet to be indicated to him, for a life of prayer and penance until the accusations made against him are examined in a regular canonical trial".
Among the boys McCarrick allegedly abused was a child he had baptised shortly after he was ordained a priest.
Francis received McCarrick's letter offering to resign from the College of Cardinals on Friday evening, after recent weeks brought a spate of allegations that the 88-year-old prelate had for years sexually abused boys and had sexual misconduct with seminarians.
The McCarrick case posed a test of the pontiff's recently declared resolve to battle what he called a "culture of cover-up" of similar abuses in the Catholic church's hierarchy.
The Vatican did not say where McCarrick would be confined nor when a church trial might begin. The order suspending him from public ministry effectively approved a measure already taken against McCarrick since last month.
A Catholic University canon law expert, Kurt Martens, noted this was the first time an order of penance and prayer had been issued before a church trial takes place.
US Catholics who have followed sexual abuse scandals involving clergy hailed stripping McCarrick of cardinal's rank as an unprecedented shift in how the Vatican has dealt with allegations against top churchmen.
"The Vatican almost never moves at this speed," said Terence McKiernan, of BishopAccountability.org.Inc, a Massachusetts-based nonp-rofit group that tracks clergy sexual abuse cases.
The pope appears to "understand the gravity of the situation and further harm to the Catholic church's status," he said.
In the case of Scottish Cardinal Keith O'Brien, accused by former seminarians in 2013 of sexual misconduct, Francis only accepted his resignation after the Vatican's top abuse prosecutor conducted a full investigation, two years after the first revelations came out.
McCarrick had been already removed from public ministry since June 20, pending a full investigation into allegations that he fondled a teenager over 40 years ago in New York.
A man, who was 11 at the time of the first alleged instance of abuse, says a sexually abusive relationship continued for two more decades.
McCarrick denied the initial allegation.
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