The former Wales defender was appointed in December by Leuven, whose owners also control Leicester City, and he led them to an 11th-place finish, enough to qualify for playoffs for a potential spot in European club competition next season.
"In those playoffs, the performances remained below expectations. That is why the club is now opting for change with a view to next season and is ending the collaboration with Coleman," Leuven said in a statement.
Coleman, 55, took Wales to the European Championship semi-finals in 2016. He also managed English clubs Fulham, Sunderland and Coventry City, and Spain's Real Sociedad.