"My adopted daughter now has a wife. I'm quite disappointed," Hun Sen said.
He made the rare revelation about his closely guarded family life during a public speech at a student graduation ceremony.
Hun Sen said he plans to file a civil court case to disown his adopted daughter so that she cannot claim any inheritance from his family.
"We are concerned that she might one day cause us trouble ... and try to stake her claim for a share of our assets," he said.
The prime minister and his wife Bun Rany have three sons and two other daughters. He said they adopted their third daughter in the mid 80's when she was 18 days old. She has carried his family name "Hun" just like his biological children. Hun Sen did not reveal her given name.
Although he is cutting ties with her, Hun Sen said he was not discriminating against gays and appealed to society to show respect for them.
"Most of them are good people and are not doing alcohol, drugs or racing vehicles," he said.
Cambodian society, like that of neighboring Thailand, is generally tolerant of homosexuality.
After watching television news reports about gay marriage in San Francisco in 2004, then-King Norodom Sihanouk wrote on his Web site that he supported the right of homosexual couples to marry.
"It's not their fault if God makes them born like that ... Gays and lesbians would not exist if God did not create them," wrote Sihanouk, who abdicated the throne in favor of his son later that year.
Sam Vuthy, coordinator of Women's Agenda for Change, a nonprofit Cambodian group advocating gay rights, declined to comment on Hun Sen's decision regarding his daughter but applauded his appeal not to discriminate against gays.