In a further sign of distress, the one-time front-runner implemented cost-cutting measures as he looked ahead to a series of costly primaries and caucuses, asking staff to defer their paychecks for two weeks.
"Governor Dean asked Roy Neel to join the campaign as CEO and Joe Trippi resigned as campaign manager," said Tricia Enright, a campaign spokeswoman.
A top Dean advisor told CBS News political editor Dotty Lynch that Trippi was asked to stay with the campaign by both Dean and top advisors. But he decided that with the campaign change -- with Neel taking over day-to-day operations -- it was best that he go.
There is a concern inside the campaign that this is a move to mollify some of the people outside the campaign, but it could hurt the original spirit of the campaign, especially on the internet side.
In terms of strategy, the advisor told Lynch there are doubts Dean will win any of the February 3 states. However they are hoping to be in a strong position to compete in Michigan and Washington, which hold contests on February 7 and Maine, which holds its contest on Feb. 8.
One day after absorbing a double-digit defeat in New Hampshire at the hands of rival John Kerry, Dean publicly and privately expressed his determination to remain in the race. At the same time, in a conference call with members of Congress who have endorsed him, he was told bluntly that finishing second wasn't good enough — that he had to show he could win a primary.
"He said he understood," said one lawmaker who was involved in the call.
Dean's campaign chairman Steve Grossman also said Wednesday that the candidate must win a presidential primary in the next two weeks to keep even his most loyal donor base — those giving modest amounts over the Web — contributing enough to make him financially competitive.
The tumultuous events capped a swift slide for Dean, who was the campaign front-runner at the dawn of the election year, the man with money, momentum and a lead in the polls nationally and in most states.
But that was before he faded to third place in the Iowa caucuses on Jan. 19, and dealt himself a further setback with an appearance before supporters that even aides conceded was overly animated and less-than-presidential.
Democrats outside the campaign were surprised that Dean would make such a dramatic move in the middle of the primary race.
"It's the campaign's acknowledgment that things have gotten drastically off course," said Anita Dunn, who helped run Bill Bradley's failed 2000 campaign. "Often, when that happens you make a managerial change, no matter how well the manager was doing."
In a television appearance on CBS' The Early Show, Dean still seemed confident in his ability win the Democratic candidacy and beat George Bush.
"I think we're actually the only people who are really electable because we're the only ones bringing in hundreds of thousands of new people into the process, which nobody else is doing … That's the way to beat George Bush," he told CBS' Harry Smith.
Trippi, who has a quarter-century of experience in Democratic politics, is widely credited with helping Dean build the campaign that transformed him from asterisk in the polls to front-runner by the end of 2003.
Dean announced that Neel would take the new position during a staff meeting, but aides who were present said he did not mention Trippi's departure. Trippi then came in and tearfully told his staff that he was leaving.
"Howard Dean is the guy who is going to fight for the country for real change and (I) hope people stick with him," Trippi said as he left campaign headquarters with his wife, Kathy Lash, who also worked for Dean.
"I'm out of the campaign, but I'm not out of the fight," he said. "We need to change America."
Dean aide Kate O'Conner said Dean wanted Neel to take over office operations, but wanted Trippi to stay on as a strategist running the Internet operations, an offer he turned down.
Trippi had been part of the staff faction that had urged Dean to focus on a few states that could be won, skipping all or most of the Feb. 3 contests in favor of Michigan, Washington state and Wisconsin. Dean and Neel dug in their heels, insisting that he had to play everywhere — an argument that prevailed as Trippi left.
His departure sent shock waves through the campaign, where he is a popular boss and something of an icon to the thousands of Internet-savvy supporters across the country. It was not unusual for crowd members to look for Trippi's autograph before Dean's at campaign events.
"Trippi has been a driving force in the campaign. There's no question it's been built around his interesting personality," said Donna Brazile, who helped run Gore's campaign. "But there's more to the Dean campaign than Joe Trippi. He has been the heart of it, but he does not embody it."
Dean campaign officials said the move is a sign of Gore's growing influence in the campaign. The 2000 Democratic presidential nominee had recommended that Neel play a larger role, officials said.
Trippi's critics in the campaign had complained to Dean about the massive TV ad expenditures in Iowa and New Hampshire, a share of which went to the media firm run by Trippi and Steve McMahon.
The ad team of McMahon and Mark Squier will remain on the campaign, but they've been told to build a broader ad team that includes creative input from Hollywood and New York specialists to produce better spots, said a senior official who spoke on condition of anonymity.
He and other officials predicted that some campaign aides will follow Trippi out the door in protest, and said there is concern in the campaign that Dean's supporters on the Internet will give up on his bid.
Neel, Gore's former senatorial chief of staff, served as chief executive of the U.S. Telecom Association in Washington before working on Gore's 2000 presidential campaign. Neel was named to head Gore's transition team in anticipation of the former vice president winning the White House.
Neel pledged to join Dean's campaign after Gore endorsed the former Vermont governor on Dec. 9.
As word of the staff change circulated, the official blog on Dean's Web site lit up with mixed reaction from campaign supporters. Several praised Trippi's skills that they said brought Dean's candidacy as far as it has, while others said it was past time for a shake-up.
"Let's all give our thanks to Joe Trippi as he took this campaign from obscurity to front runner status. Now is the elections and a different kind of campaign was needed," said a post from "rwilson4dean."
"Good, Trippi needed to be replaced," wrote "NJ for Dean." "Maybe HQ will start to listen to us!!!! Get better ads!"
The decision to shake up the campaign was made in a series of discussions in Burlington, Vt. — on a day that his rivals were already out campaigning for votes in the seven states that hold primaries and caucuses on Feb. 3.