Buchanan will head to England later this month where he will act as a consultant for the English and Wales Cricket Board.
"Obviously, I am very disappointed in not being able to continue with the Knight Riders and complete the work I started some 18 months ago," Buchanan told Cricinfo last night.
"I think we have the makings of a very good IPL franchise, and the foundations are there for 2010."
Buchanan is due to take up a specialist role wit h the England and Wales Cricket Board in coming weeks, developing the Under-19s and England Lions teams.
His coaching methords have been criticised by some former Australian players led by Shane Warne, who has never had a lot of time for the complex stategies devised by Buchanan for on and off the field.
"He has not achieved everything that he set out to,'' part-owner Jay Mehta told the BBC.
"Buchanan had a vision for Knight Riders. Unfortunately it has not brought the results that are so necessary to this franchise.''
Buchanan's dream was to make the Knight Riders a global brand along the lines of Manchester United soccer team and he brought the side to Brisbane last September to train at the Centre of Excellence.
"Soccer has Manchester United, baseball the New York Yankees and cricket can have the Kolkata Knight Riders,'' Buchanan wrote in his just released book The Future of Cricket.
His demise was not for the want of a committed effort and he relentlessly ventured around India to conduct talent spotting classes including one on an asphalt basketball court in Mumbai.
The Knight Riders, with their striking black and gold playing gear, were initially seen as a glamourous franchise bankrolled by Shah Rukh Khan but their star faded through non-performance.
Buchanan made the brave call to replace Kolkata icon Sourav Ganguly as captain after the first season but his replacement, Kiwi wicketkeeper Brendon McCullum, buckled emotionally under the pressure of leadership and the team crumbled beneath him.
The side was also unsettled by the presence of an anonymous mystery blogger who called himself a Knight Riders fringe player and wrote a series of damaging reports about the inner workings of the team.
"John has informed Knight Riders that despite his hard work over the past two seasons, he has not achieved everything that he set out to and has not been able take the franchise into the future as per his vision for this team," said Mehta.
Former Australian players Steve Waugh, Michael Bevan and Dav Whatmore have been mentioned as possible coaching replacements.