Assistant coach Ishfaq Ahmed will take charge of the popular club in the remaining two inconsequential matches "on an interim basis till a permanent replacement is announced".
Kerala Blasters, however, said Vicuna was leaving the club on "mutual consent".
"The club can confirm that we have parted ways with head coach Kibu Vicuña on mutual consent. We would like to thank him for his contributions during the season and wish him all the very best in his future endeavours," the club said in a statement.
Vicuna, who guided Mohun Bagan to I-League title last year, said unfortunately the season has been unusual and unexpected for Kerala Blasters.
"...I always give all my heart ...but also give no excuses. I want to thank all the management, players, coaching staff, and members of the club for their professionalism, kindness, and closeness. I want to express my gratitude to all the Kerala Blasters fans for their support," he said.
Kerala Blasters Sporting Director Karolis Skinkys said the club had a clear objective to make improvements this season but unfortunately the results were not what it expected.