In a statement on his website, the president said he had changed nine of the 29 cabinet posts.
The ministries of information, industry and national planning and economic development are among those affected.
The reshuffle is the largest since Thein Sein's government took office in March 2011 after the military junta ceded power.
Rumours about a possible government shake-up have circulated for months.
The dominance of Burma's military is entrenched in its parliament and political system, with a total of 25% of its MPs coming from the armed forces.
But the BBC's Jonathan Head, in Bangkok, says that the president seems to be doing what he can to keep the promised reforms on course.
One of the most prominent hardliners, former Information Minister Kyaw Hsan, is among those who have been moved, our correspondent explains.
He has been shifted to a more minor ministry, which may eventually be shrunk or abolished.
The new information minister is the more moderate Aung Kyi, who was the military's negotiator with opposition leader Aung San Suu Kyi while she was under house arrest.-British Broadcasting Corporation (August 27, 2012)
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