Ferrari has failed to deliver a title in both 2017 and 2018 after multiple incidents, strategic errors and management issues throughout the second stage of the season.
But the recent rift between Binotto and Arrivabene has pushed Ferrari to make a reported change, with the team principal shown the door as Binotto will take over.
"After four years of untiring commitment and dedication, Maurizio Arrivabene is leaving the team", the Italian outfit confirmed on Monday.
His promotion to the head of the team's technical programme in July 2016 was still considered a surprise at the time, although Ferrari's on-track fortunes have improved in the last two seasons with runner-up positions to Mercedes.
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.
"With immediate effect, Mattia Binotto will take over as Scuderia Ferrari's Team Principal".
The Ferrari veteran, who has risen through the ranks to technical director and overseen a big step up in engine performance, has also reportedly been a target for rival constructors.
However, Ferrari have been unable to end Mercedes' stranglehold of F1's world titles despite having been thought to have had quicker cars at certain points of the last two seasons.
Ferrari's power gains in 2018 were impressive, they had a faster auto than Mercedes for stretches of the season, however errors on the track and pitwall cost the team, and possibly Arrivabene his job.
"Binotto did an excellent job as technical director, previous year Ferrari had a very good vehicle, very fast and with a different management of the drivers could bring the world championship home". One of Binotto's most obvious tasks this year will be to ensure this situation never escalates into anything damaging to the team.
Arrivabene, who is 61, joined Ferrari in 2014 having been vice-president at the tobacco company Philip Morris, a long-term sponsor of the team.