Weatherill offered to resign Wednesday night and Horne accepted, he announced at a news conference.
"She felt the reputation of Alberta Health Services and, even more importantly, public confidence in our health care system was the most important thing."
Weatherill served as president and chief executive officer of Capital Health in Edmonton from 1996 until 2008 when Alberta's health regions were consolidated.
As chief executive officer, Weatherill personally approved lavish expenditures by Allaudin Merali, Capital Health's former chief financial officer.
Weatherill addressed the expenses in her resignation letter that was released by Horne Thursday afternoon.
"I recognize questions have arisen about expenses, but I would like to clarify that Capital Health had appropriate expenditure policies that were consistent with other public sector organizations," she wrote.
Merali was fired Wednesday as Alberta Health Services' executive vice-president and chief financial officer, just hours before CBC News was to air a story about $350,000 in expense claims he ran up between January 2005 and August 2008.
Documents obtained by CBC News show Merali often dined out, at public expense, two or three times a week at high-end restaurants often with no explanation for the expenses other than “dinner meeting.”
He also spent thousands of dollars on bottles of wine and even a phone for his Mercedes Benz car.
Health minister 'outraged'
Merali worked in Ontario in 2009 where he made headlines for expensing tea, muffins and minor parking fees to EHealth Ontario while making $2,700 a day.
He was hired back at Alberta Health Services three months ago.
Horne said Thursday he is outraged by Merali's expense claims, but couldn't say if Merali will be forced to pay any money back.
Horne could not recall the meal he had with Merali at Jack's Grill on Mar. 30, 2005, when Merali picked up the $220 tab. Horne was a health consultant at the time.
Horne said he wasn't aware of Merali's controversial past when AHS hired Merali, but he wondered why the board did not either.
"I'm as dumbfounded by this as anyone else," he said. "I want to know what the board knew. I intend to find out.
"Should we have known? Yes.
"The board of Alberta Health Services and I will be having some very, very serious conversations in the weeks and months ahead," he said.
Severance pay under negotiation
Horne tread carefully around the issue of Merali's severance pay, but he promised whatever is agreed to will be made public.
The Canadian Taxpayers' Federation Scott Hennig said the scandal indicates why expenses run up by senior bureaucrats should be made public.
"This is just indicative of a system that is not transparent," he said. "You have to have hard-working reporters out there trying to file requests and dig this stuff out for it to be public. This is public information. It should be public information.
"They should be proactively disclosing this stuff well in advance of reporters asking for it."
The province charged CBC News around $500 for the documents, which were posted in their entirety on the AHS website Wednesday afternoon.
In a posting to his Twitter account on Thursday, Horne said that he directed AHS to provide a refund to the CBC. An official dropped off the uncashed cheque a few hours later.
Sheila Weatherill's resignation letter: