Mr Trump had been "very concerned" the retired army lieutenant general misled Vice President Mike Pence and others, spokesman Sean Spicer said.
Mr Spicer said General Flynn forgot "critical details" about his phone call on 29 December with Russia's ambassador to the US, Sergey Kislyak, creating "a critical mass and an unsustainable situation".
But the press secretary insisted Gen Flynn had stepped down over a "matter of trust" rather than a legal issue.
He also pointed out there had been a "series of other questionable instances".
Senate Democratic leader Charles Schumer has called for an independent investigation into what he called potential criminal violations surrounding the national security adviser's resignation.
Gen Flynn quit on Monday, less than a month into the job, as he apologised for giving Mr Pence and others "incomplete information" about the phone call, which happened on the same day President Obama announced new sanctions on Russia.
Gen Flynn discussed sanctions with Mr Kislyak in the conversation that took place before Mr Trump was in power - and before he had officially taken up his own role.
Under the Logan Act, it is illegal for an unauthorised citizen to conduct diplomacy on behalf of the US.
Mr Spicer said Justice Department officials raised the matter of the phone call with Mr Trump's advisers on 26 January - and believed they had waited too long to do it.
The real story here is why are there so many illegal leaks coming out of Washington? Will these leaks be happening as I deal on N.Korea etc?
— Donald J. Trump (@realDonaldTrump) 14 February 2017
The press secretary claimed White House lawyers had decided the situation did not pose a legal issue.
Also on 26 January, the FBI interviewed Gen Flynn about his conversation with Mr Kislyak but it was not clear what he said, according to the New York Times.
Mr Spicer said: "The President was very concerned that General Flynn had misled the Vice President and others.
"The evolving and eroding level of trust as a result of this situation and a series of other questionable instances is what led the President to ask for Gen Flynn's resignation."
Gen Flynn may need to testify at a congressional hearing investigating Russia's alleged interference in last year's presidential election, according to Republican Senator Bob Corker.
Mr Spicer said Mr Trump was "very, very concerned" about leaks in the Flynn case.
Earlier in the day, the President blasted what he called "illegal leaks" coming out of Washington.
In the aftermath of Gen Flynn's departure, the President wrote on Twitter that the "real story" was the alleged leaks - and he questioned if they would continue as he deals with issues such as North Korea.
The Brain Behind this Blog
