Kelly was the latest casualty in a scandal that threatens to upend Christie's second term and his expected run for president in 2016. Two other top Christie appointees have resigned in the past few weeks.
The investigation broke wide open on Wednesday, with the release of emails and text messages that suggested Kelly arranged the traffic jams to punish Fort Lee's mayor for not endorsing Christie for re-election. The gridlock delayed emergency vehicles, school buses and countless commuters for four days.
In other developments in the case:
The chief federal prosecutor in New Jersey, U.S. Attorney Paul Fishman, said he is "reviewing the matter to determine whether a federal law was implicated." The Legislature is also investigating. Using public resources for political ends can be a crime.
David Wildstein, a Christie appointee who resigned from the Port Authority of New York and New Jersey after being implicated in the scandal, was found in contempt Thursday by a legislative committee after he invoked his Fifth Amendment right against self-incrimination and refused to answer questions.
Besides firing Kelly, the governor cut ties to former campaign manager Bill Stepien, asking him to withdraw a bid to become the next state GOP chairman. The governor said he was disturbed by the "callous indifference" displayed by Stepien in the emails released Wednesday.
Stepien had widely been seen as a potential campaign manager for Christie if he runs for president.
Christie said he is still looking into the traffic-jam episode and will take action against other senior staff members if it is warranted.
The governor said he would go to Fort Lee later in the day Thursday to apologize in person to Mayor Mark Sokolich. While Sokolich accepted Christie's public apology, he urged the governor to delay his visit, saying he suspects the whole story has yet to come out.
The mayor said the emails and text messages in which Christie loyalists gloat over the traffic jams and call Sokolich "an idiot" and "this little Serbian" revealed that the governor's office was tainted by "venomous, petty" politics.
The allegations turned a local traffic furor into a national issue and raised questions about the governor's leadership and integrity as he lays the groundwork for a White House bid. Democrats at the national level have seized on the scandal as more evidence that Christie is a bully.
But Christie brushed off questions about the effect on his presidential ambitions, saying he was too busy governing the state to think about that.
Christie focused repeatedly not on the lane closings themselves but on how upset he was that his staff didn't tell him the truth when asked, saying he was "heartbroken" and "betrayed" by his tight-knit circle of advisers. He said he saw the emails and text messages for the first time on Wednesday, and was "blindsided" by what he read, particularly the callous language.
"I had no knowledge or involvement in this issue, in its planning or execution," he said of the lane closings. "And I am stunned by the abject stupidity that was shown here."
Kelly hasn't commented. Christie said he hadn't spoken to her since the emails were released, saying he didn't want to be accused of trying to influence a possible witness.
"Time for some traffic problems in Fort Lee," Kelly wrote in August in a message to Wildstein. A few weeks later, Wildstein closed two of three lanes connecting Fort Lee to the heavily traveled George Washington Bridge, which runs between New Jersey and New York City.
For weeks, Christie had asserted that the closings were not punitive, but part of a traffic study. On Thursday, he acknowledged that was a lie, because his staff didn't tell him what it had done.
Christie said he believed his staff in part because he had never heard of Sokolich and had no idea his campaign was even seeking the Democrat's endorsement.
Still, the governor said: "I am responsible for what happened. I am sad to report to the people of New Jersey that we fell short."
Associated Press writer Steve Peoples in Washington contributed to this report.