The case highlights the influence of China's fast-growing microblogging community, and the ruling Communist Party's growing sensitivity and responsiveness to public anger against abuse of power, official impunity and corruption.
Screenshots from the sex video first appeared on Sina Corp's Weibo site on Tuesday.
Lei Zhengfu, a district party chief in the southwestern city of Chongqing, was fired after an investigation by the party's discipline watchdog confirmed that it was he who appeared in the video, the state-run Xinhua news agency said.
The agency reported on Thursday that Lei had told a reporter the video, shot in 2007, was a fake.
The party has stepped up its rhetoric against corruption, seeking to counter anger from citizens over regular reports of graft and debauchery among officials, but efforts to root out the problem have hardly made a dent.
Disgraced politician Bo Xilai, whose expulsion from the party overshadowed the run-up to last week's once-in-a-decade leadership transition, has been accused of engaging in "improper sexual relations with multiple women", among other crimes.
Bo, who also faces possible charges of corruption and abuse of power, has yet to stand trial.
Net-savvy Chinese people have found a potent weapon for fighting official corruption and abuse of power in microblogs like Weibo, which had more than 420 million users at the end of the third quarter this year.
In September, another official, Yang Dacai, lost his job in the northwestern province of Shaanxi after Internet users compiled photos of him wearing several luxury watches that he was unlikely to be able to afford on a civil servant's salary.
A month later, an urban management official in the southern province of Guangdong, Cai Bin, was sacked after online postings about him owning 22 homes.
Lei's sacking was among the most talked about topics on the hugely popular Weibo site on Friday.
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