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Milan announced that Leonardo had left his position as sports director.
A statement published on the official website of Milan thanked Leonardo for his "important contributions to the progress of the club" and indicated that his successor would be named "in due course".
"Leonardo joined AC Milan at the hour of need a few weeks before the closure of the summer transfer window," said CEO Ivan Gazidis.
"In very difficult circumstances, he put his heart and soul to the service of an extremely complex situation and transmitted his energy and ambition to the team.
"I am very grateful to Leonardo for all that he has brought to our great club and I wish him every success in his future endeavors."
A former Rossoneri midfielder and coach, the Brazilian did not return to San Siro until last summer, after Elliott Management took control of the club.
However, his position became untenable after the Diavolo failed to qualify for the Champions League.
Milan is also expected to announce the release of coach Gennaro Gattuso on Tuesday night.
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