Martin Allen has left Leicester City as manager by mutual consent.
"Given our respective visions for the club, it was decided that it would be in everybody's best interests if we parted company," said Mandaric.
Last week, Allen insisted speculation about his future was "rubbish".
But a statement on the club website openly admitted that "differences between both parties regarding the direction of the club have led to a breakdown in the relationship".
The Foxes have appointed academy manager Jon Rudkin, coach Steve Beaglehole and goalkeeping coach Mike Stowell to take charge of the first team on a caretaker basis.
But Leicester said they do not have an immediate replacement lined up, contrary to speculation linking them with former Sheffield United boss Neil Warnock.