"We cannot accept new strategic dependencies in the digital sphere," Lecornu said in a social media video announcing €655 million of new public investment in developing the country's own AI.
The decision by the Direction Generale de la Securite Interieure (DGSI) to end its contract with Palantir follows Washington's move last week to cut off access to AI firm Anthropic's powerful Fable model to non-American users.
France should "not depend on the good will of certain partners, who are capable of turning off the access tap" for artificial intelligence, Lecornu said.
The Fable incident prompted calls for greater independence from the United States in AI development from candidates across the political spectrum for next year's French presidential election.
France's move comes amid a more general attempt to move away from American tech and embrace European alternatives, with the French government and civil service replacing Microsoft products with the European Linux.
READ ALSO: 15 French replacements for American tech
Palantir's French arm did not immediately respond Tuesday to AFP's request for comment.
The company was co-founded by Peter Thiel, a right-wing Silicon Valley billionaire close to US President Donald Trump, with support from America's CIA.
It has notably worked with the US government to identify undocumented immigrants or targets in the US-Israel war on Iran.
Campaign groups have warned that the company's products pose risks related to mass surveillance, infringements on individual freedoms and data protection.
But Palantir insists it simply provides powerful data processing services that can help surface nuggets of useful information in the flood available to government agencies and big companies.
British lawmakers earlier this month called for the country's National Health Service (NHS) to end its own contract with the American company.
"Reliance on a small number of US-based providers represents a clear vulnerability" which could leave public services "at the mercy of foreign actors," the report from parliament's Science, Innovation and Technology Committee said.
The London mayor's office also blocked a bid by the British capital's Metropolitan Police to work with Palantir.
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