According to the New York Times it is not clear if he was ousted or left on his own accord.
Apple spokesman, Steve Dowling, confirmed the departure saying that Papermaster "is leaving the company and Bob Mansfield, senior vice president of Macintosh hardware engineering, is assuming his responsibilities."
Observant readers may have noticed that Papermaster was not present at the iPhone 4 press conference. DaringFireball's John Gruber says, "from what Ive heard, its clear he was canned. Papermaster was a conspicuous absence at the Antennagate press conference. Inside Apple, hes "the guy responsible for the antenna" thats a quote from a source back on July 23. (Another quote from the same source: "Apparently the antenna guys used to have a big chip on their shoulder. No more.")"