Mr Cable lost to Conservative rival Tania Mathias by more than 2,000 votes.
The party's deputy leader Simon Hughes was also among those who lost out, along with Energy Secretary Ed Davey.
Nick Clegg retained his Sheffield Hallam seat but acknowledged the damaging losses to his party.
"It's painfully clear this has been a cruel and punishing night for the Liberal Democrats," the party leader said.
Mr Cable, 71, had been the MP for Twickenham since 1997 and was made Secretary of State for Business, Innovation and Skills in 2010.
"Unfortunately, this has been a terrible night for our party all over," he said following his defeat.
Mr Hughes, who lost to Labour's Neil Coyle in Bermondsey and Old Southwark, had been an MP since 1983 and was described as a "legend" by the party's leader.
Elsewhere, former party leader Charles Kennedy was beaten by the Scottish National Party, and Home Office minister Lynne Featherstone lost to Labour.
Another long-serving Liberal Democrat who has lost his seat is Sir Bob Russell, who had been the MP for Colchester, Essex, since 1997.
The Conservative Party's press office tweeted a message of congratulations to Colchester's Conservative candidate Will Quince earlier in the night.
Sir Bob told BBC Essex he was philosophical about the result.
"Nobody ever expected I'd end up as MP for Colchester. For the last 18 years I've felt like a park footballer who's found himself playing in the Premier League.
"There's a lot of emotion. A hell of a lot of work was put in by a lot people. But people are entitled to vote the way they do," he said.
A number of high-profile Liberal Democrat figures, including Business Secretary Vince Cable, have lost their seats in a "cruel and punishing" night for the party.