KiwiRail's board has decided not to renew the contract of chief executive Jim Quinn when it expires in February next year.
Chairman John Spencer says the publicly-owned company is well into its plan to improve its loss-making position, but the firm needs to go to another step in lifting financial performance.
"The board's decision was we that we needed someone with a slightly different skill set to Jim to take it forward."
The chairman praised Mr Quinn, saying the freight business had grown by $100 million in his four years in charge, and more than $2.5 billion had been invested in improving the rail operator's network, rolling stock, passenger trains and ferry terminals.
Mr Quinn says while the company has done a lot of amazing things, it has not met its targets, partly because of external events such as economic conditions and the Canterbury earthquakes.
During his tenure he oversaw the controversial decisions to close the Hillside manufacturing site in Dunedin, which cost more than 130 jobs, and the closure of the Napier to Gisborne rail line.
The Rail and Maritime Transport Union says Mr Quinn's departure could jeopardise the focus on improving health and safety at KiwiRail.