Michel's now been asked by King Philippe to take up the role of caretaker prime minister, with reduced powers, until a solution can be found. This will either mean early elections, or the cobbling together of a new governing alliance.
Michel's been in the top job for four years, becoming Belgium's youngest leader in 173 years when he took the helm in 2014. Now he's been forced to tender his resignation in the face of violent protests. So where did it all go wrong?
The answer lies in a UN deal seeking a global approach to migration that was signed by 164 countries - including Belgium - in Marrakesh last week and is being ratified Wednesday. As Pieter Cleppe, head of the Open Europe think-tank in Brussels explains, Michel's Flemish nationalist partners were opposed to the deal, and had wanted Michel to abstain from it.
"They asked the Prime Minister to abstain ... but because he's been seen as the N-VA's puppet over the past few years, he did not want to give in to them. He took a risk and his government collapsed," Cleppe says.
"But it's important to point out that, unlike the far right, the N-VA are not against migration. They are in favour of controlled migration," he adds. "They knew it was non-binding but said that was an issue because the pact does not make any big changes to the current migration policies which the N-VA sees as very problematic."
European states including Italy, Austria, Hungary, Poland and Slovakia declined to adopt the pact, which seeks to improve channels for legal migration - and provide for the rights of countries to determine their national migration policies. Defending the deal, Michel argued it offered an "opportunity for better European and international co-operation".
Michel's resignation comes on the back of angry protests against the pact in Brussels, where police used tear gas and water cannon to restore order. Appealing to parliament to allow him to carry on leading a minority government, Michel - of the liberal, French-speaking Reformist Movement - warned Belgium would be left rudderless if they didn't.
Divisions along linguistic lines
Of course the country - which is sharply divided along linguistic lines - already famously survived without a government for 589 days. That was during the last political crisis in 2010-11.
Martin Conway is a professor of modern European history at Oxford University, and the author of two books on Belgium's political past. He told RFI that Brussels has never been crucial to the day-to-day running of Belgium, adding that recent events prove it's not easy to be a centist leader in Europe these days.
"In a way Belgium has always been well-adapted to living without a government. It came into existence in the mid 19th century, and it's proved to be a very successful, modernising industrial society. But the central glue of a Belgian patriotism and a commitment to the central government has long been weak."
"They have a very strong culture of getting by, of sorting out compromise deals and bringing people together. The events in parliament are a good example of how things work well in Belgium. It's not an air of 'crisis'; it's more an air of 'now we have to move on and find another solution."
Balance of power challenged across Europe
Conway says that as with the "gilets jaunes" or yellow vest protests plaguing the French president Emmanuel Macron, protests in Brussels show the balance of power is being challenged in European democracies. People are fed up with the deal-making and complicated coalition policies that aren't representative of their wishes.
"The Belgian crisis is a very good example of the way in which a broader structure of effective representative government is under strain in Europe at the moment," Conway says.
"We know we have a French president with a very large parliamentary majority, but that doesn't necessarily give him the public legitimacy or the public authority to instigate social or political reforms - and we have very much the same situation in Spain and in Italy.
"So there is a general weakness of representative government, which is something that probably does mark the beginning of the 21st century in western Europe - that very structured form of democracy based around disciplined political parties often reaching deals with each other and forming coalition governments and carrying out complicated policy. That whole way of doing government in Europe is breaking down everywhere."
"Society is becoming more polarised, more fractured, more volatile, more short term - and, in some ways, less political. While it's easy to see these public demonstrations in Brussels and France as manifestations of a new sort of politicisation, to my mind they are much more about the breakdown of old forms of politicisation. People don't feel engaged in the political process and so they throw rocks at it."