The decision was made by the Church Commissioners and the CofE's Pensions Board following advice from the Church's Ethical Investment Advisory Group (EIAG).
The total shareholding sold was worth £1.9 million. The decision means that none of the three national investing bodies of the Church of England holds shares in the company.
The sale of shares comes after the Church raised concerns about the phone hacking allegations with the Board of News Corp.
After a year of dialogue, the Church said it was "not satisfied" that News Corp "had shown, or is likely in the immediate future to show, a commitment to implement necessary corporate governance reform".
Andrew Brown, Secretary of the Church Commissioners, said: "Our decision to disinvest was not one taken lightly and follows a year of continuous dialogue with the company, during which the EIAG put forward a number of recommendations around how corporate governance structures at News Corporation could be improved.
"However the EIAG does not feel that the company has brought about sufficient change and we have accepted its advice to disinvest."
The Church of England set up the EIAG in 1994 to advise on its three national investing bodies.
Between them, the Church Commissioners for England, the Pensions Board, and the CBF Church of England Funds hold a broad range of assets worth in excess of £8bn.
The funds are used to sustain the Church's network of 12,000 parishes, 16,000 churches, 8,500 stipendiary priests - and their pensions - and 10,000 readers and pastoral assistants, and to support the work they carry out in their local communities.
Church investment excludes companies involved in military products and services, pornography, alcoholic drinks, gambling, tobacco, human embryonic cloning and high interest rate lending.