Binotto has served as Ferrari's technical director since 2016 but rumours of tension between himself and Arrivabene were rife a year ago as the team's title challenge faded for the second consecutive season.
"The decision was taken together with the company's top management after lengthy discussions related to Maurizio's long+-term personal interests as well as those of the team itself".
Ferrari is set to make big changes within the leadership of the team before the 2019 Formula 1 Season begins with Arrivabene set to lose his role within the team.
Arrivabene was criticized for the way Ferrari handled its home Italian Grand Prix in September, when a lack of team orders prevented Kimi Raikkonen from clearing the way for Vettel at the start - which was followed by contact between Vettel and Hamilton.
Strategic blunders by the team past year only increased the pressure.
There have always been rumours that Binotto and Arrivabene had disagreements about the direction and approach of the team.
Binotto had reportedly been chosen previously as Arrivabene's successor by former Ferrari CEO Sergio Marchionne, who died in July. The team finished second in the constructors' championship in his first season in charge before slipping back to third in 2016, but mounted more serious title challenges over the last two seasons.
Binotto has risen through the Ferrari ranks over the last two decades with many crediting the Italian team's power unit gains to him, after he took over as power unit Chief Operating Officer ahead of 2015. There has been talk of his exit for more than a year.
"This year Ferrari had what it takes to win the championship and did not do it", Briatore explained.
Arrivabene was appointed principal of the sport's oldest, most successful and glamorous team in November 2014, replacing Marco Mattiacci who had taken over after Stefano Domenicali resigned in April of that year. While some key figures have left - notably technical chief Paddy Lowe to Williams - they have been quietly and efficiently replaced and the powerhouse operation has continued.
Binotto will be spearheading a team also welcoming a new driver, with exciting academy product Charles Leclerc promoted to partner Sebastian Vettel this season. And while strong technically and great with the staff, it's unclear whether Binotto has the commercial experience required to deliver in this role.