His resignation was submitted to King Willem-Alexander on Saturday, setting the stage for a general election later this year.
Mr Rutte's visited the king who had to cut short his family holiday in Greece for the meeting.
Despite the hour-long discussion, the specifics of their conversation remained private as Mr Rutte declined to answer questions from the press.
Migration, a subject of intense debate across Europe, emerged as the final wedge that fragmented Mr Rutte's administration on Friday night.
The ideological differences among the coalition's four parties were brought to the surface, a theme likely to dominate the electoral campaign in the coming months.
Geert Wilders, leader of the anti-immigration Party for Freedom, said: “We are the party that can ensure a majority to significantly restrict the flow of asylum seekers.”
Mr Wilders, who had previously supported Mr Rutte's first minority coalition, eventually contributed to its downfall.
The opposition from the left has accused Mr Rutte's government of failing to address other pressing issues such as climate change, housing shortage, and the future of the nation's multibillion-euro agricultural sector.
Socialist Party leader Lilian Marijnissen, speaking to Dutch broadcaster NOS, said the government's collapse was “good news for the Netherlands. I think that everybody felt that this Cabinet was done. They have created more problems than they solved.”
Sigrid Kaag, leader of the pro-Europe D66 party, emphasised the urgency of maintaining political stability amid the current challenges, tweeting: “Given the challenges of the times, a war on this continent, nobody profits from a political crisis.”
Despite his reputation as a seasoned consensus builder, Mr Rutte's firm stance on limiting asylum seekers appears to have brought down his fourth coalition government.
His proposal to create two categories of asylum and limit the number of family members allowed to join asylum seekers in the Netherlands was met with strong opposition, particularly from the ChristenUnie party, a minority coalition partner.
The Dutch government, though collapsed, will remain as a caretaker administration until a new coalition is formed.
Meanwhile, the Farmers Citizens Movement (BBB), a new populist pro-farmer party that recently won provincial elections, poses a serious threat to MR Rutte's People's Party for Freedom and Democracy.
BBB leader, Caroline van der Plas, took to Twitter to announce: “The campaign has begun!”
As the country's longest-serving premier, Mr Rutte, 56, expressed interest in running for a fifth term during a press conference on Friday, pending discussions with his party.
Despite the government's collapse, Mr Rutte reassured Ukrainian President Volodymyr Zelenskyy that Dutch support for Ukraine would remain unaffected during the transitional period.
The king is expected to request the caretaker coalition to remain in power until a new government is established, a process which is anticipated to take several months due to the divided political landscape of the Netherlands.
The debate on migration has been a critical issue in European politics, similar to the 2015-2016 migration crisis. This has led to increased support for far-right parties in Germany and Spain, and the trend seems to be influencing Dutch politics as well.
Farmers' protest party BBB emerged as the biggest party in the March provincial elections.
An Ipsos poll conducted a week prior to the government's collapse projects Mr Rutte's VVD to remain the largest party in the 150-seat parliament with 28 seats.
However, BBB is expected to rise from one seat to 23, making it the second largest.
The BBB also supports stricter migration policy and proposes a yearly cap of 15,000 asylum seekers.
Despite having one of Europe's strictest immigration policies, asylum applications in the Netherlands saw a surge by a third last year to over 46,000. It is anticipated they could reach 70,000 this year, surpassing the previous record set in 2015.