The Sabah Progressive Party (SAPP) announced it would quit the 14-party Barisan Nasional coalition, three months after it proposed a no-confidence vote against Mr Abdullah, in the first defection in the coalition since elections in March.
SAPP, which accounts for only two of Barisan's 140 MPs, has little clout but there are concerns this could spark an exodus from other coalition members to the opposition, led by Anwar Ibrahim.
Mr Anwar needs 30 government MPs to join his opposition alliance, which has 82 legislators in the 222-strong Malaysian parliament.
He said on Tuesday that he had the numbers and demanded handover talks with the prime minister, although he declined to name MPs and say how many had said they would join him.
Earlier Mr Abdullah handed the key finance ministry post to his chosen successor, Deputy Prime Minister Najib Razak, and hinted he might leave the top job earlier than 2010 as planned.
Mr Abdullah again dismissed Mr Anwar's claim that he had won over sufficient MPs to take power and said he had no plans to meet the opposition leader.
"I see (Anwar) is a threat to the economy and probably security," he said.