The 49-year-old joined the Exiles last summer having been assistant coach at Waikato Chiefs.
Irish won just four games last season as they were relegated from the top flight for the first time since 1994.
His departure follows a review of the club's rugby department which also saw assistant coach Richard Whiffin leave.
Coventry, who was just one year into a three-year contract as head coach, says London Irish are still "in a good place to bounce back immediately".
"The club has recruited well with a sound balance of experience and youth supported by an excellent academy programme," he said. "I wish the club all the best in their future direction and drive for Premiership status."
Exiles chief executive Bob Casey added: "Having undertaken a review of the past season and taken time to consider its implications, and given his family situation, our discussions with Tom have resulted in agreement that it is in his best interests to return to New Zealand."
Tom Coventry has resigned after only one season as head coach of London Irish to return home to New Zealand for family reasons.