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He previously apologised after making 26 private flights since May at a cost of $400,000 (£300,000) to taxpayers.
Government officials, except those dealing with national security matters, are required to take commercial flights for work related travel.
Three other members of President Donald Trump's cabinet are under scrutiny for using private planes while working.
A White House statement said President Trump had accepted Mr Price's resignation, adding that Don J Wright had been designated as acting health secretary. Mr Wright is currently deputy assistant secretary for health.
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In his letter of resignation, seen by the New York Times,
Mr Price said he regretted that "recent events have created a distraction" from the work of the health department.
An investigation by the political news website Politico found that Mr Price's travels had cost more than $1m (£750,000).
As well as the $400,000 for private flights, that figure includes the cost of military aircraft used for Mr Price's trips abroad, Politico added.
President Trump had earlier said he was "not happy" with the expense.
A scandal too big to ignore
Anthony Zurcher, BBC News, Washington
In July Donald Trump joked that if Tom Price didn't get a Republican healthcare plan through Congress, he would be fired. People laughed.
Obamacare repeal went down in flames again this week, and Mr Price is out. No-one is laughing now - no Republicans, at least.
The situation is more complicated than that, of course. An ever-ballooning price tag for Mr Price's private jet trips became a scandal too big to ignore. The exorbitant spending, breaking with past practices, cut directly against Mr Trump's campaign promise to rein in wasteful spending.
If Mr Price had given the president the legislative victory he desperately wanted, the secretary may have been spared. Instead, he was marched to the gallows.
The risk for the administration has not passed. Other officials have racked up their own inordinately high travel expenses. Senior presidential adviser Kellyanne Conway was on one of Mr Price's flights - hinting that the scandal may reach inside the White House.
The precedent has been established that such extravagances can be a fireable offence.
Three other members of Mr Trump's cabinet are under scrutiny for their use of private planes while on the job:
- Interior Secretary Ryan Zinke flew from Las Vegas to Montana last June on a private jet that cost taxpayers more than $12,000, according to Politico and the Washington Post
- Treasury Secretary Steven Mnuchin is accused of flying with his wife to view last month's solar eclipse
- Environmental Protection Agency chief Scott Pruitt has spent more than $58,000 on non-commercial travel
As well as the Vegas-Montana trip - a route served by commercial flights - Mr Zinke is also reported to have used private jets between St Croix and St Thomas in the US Virgin Islands in March, and a military aircraft to travel to Norway in May.
Interior department spokeswoman Heather Swift said in a statement that, as with previous interior secretaries, Mr Zinke "travelled on charter flights when there were no commercial options available".
"All travel is pre-approved by the ethics office before booking and the charter flights went through an additional level of due diligence," she said.
[BBC SOURCES]
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