Andy Hessenthaler has been placed in temporary charge of the East Londoners, with the club currently just two points adrift of the play-offs.
But having enjoyed an initial upturn in results under the 33-year-old, Orient's CEO Alessandro Angelieri has decided to make a change, with a 3-0 defeat to Barnet on Saturday proving the final straw.
However, Angelieri insists the former West Ham skipper still has a future at the club as a player.
In a statement released on the club's official website, Angelieri said: "Everyone at the club is fighting hard to make sure we reach the play-offs this season.
"Whilst that aim remains within reach, we have decided that Kevin should focus entirely on his playing contribution until the end of the season.
"We believe that Kevin will be able to make a bigger impact on the team without the distraction of managerial duties.
"Andy Hessenthaler, who has been assisting Kevin over the past few months, will take charge of the first team in the interim."
Nolan is the sixth manager to be removed from his position at the club in the last two years since Francesco Becchetti's takeoever, with Russell Slade, Kevin Nugent, Mauro Milanese, Fabio Liverani and Ian Hendon all previously being shown the door.