He is to be replaced by Leon MacDonald for a three-year stint. Umaga will stay on and take up a two-year contract as defensive coach.
Umaga's contract was extended in May to 2019, but the changes have been put in place after an end-of-season review with the Blues and NZ Rugby Boards.
Umaga said his passion lies with being the defence coach.
"I believe that is where I can make the greatest contribution and difference at the Blues," he said in a statement.
"I support the decision to appoint Leon and I believe that the coaching team of Leon, Tom and myself is the best that we could have at the Blues for the 2019 season and beyond."
He also spoke of the challenge of being a Super Rugby coach.
"It's been a challenging three years for me working for the first time as a Super Rugby head coach. I have learned a lot and I know I still have a lot more to offer.
"I will be 100 percent behind helping to implement some of the strategies that we have identified that are still works-in-progress.
MacDonald who played 56 tests for the All Blacks, was involved as a coach at the Tasman Makos after he retired in 2010, then became assistant coach at the Crusaders in 2017.
He coached the Mako in 2017 and 2018.
Umaga's coaching stint has seen the Blues languish in lowly positions in Super Rugby. In four years, the team has finished in position 14, 11, 9 and 14.
MacDonald said: "I will give it my heart and soul."
He said Umaga and forwards coach Tom Coventry had spoken to him of their commitment to move the club forward.
Blues Chief Executive Michael Redman said the change was a progressive decision by everyone involved.
"This is arguably the most challenging of the Super Rugby teams and currently the most challenging environment, at least in New Zealand.
"Tana has a tremendous amount to contribute on the grass and he has learned a lot about this team. He can still apply this experience in his new role which will greatly assist Leon as new Head Coach.
"We are aware that this timing is not ideal but that was for good reason. That said, I want to publicly acknowledge everyone's willingness to embrace change, and for their commitment to our club.
"We are excited about the leadership and vision that Leon will bring with the strong support from Tana, Tom and Dan."
New Zealand Rugby's Chief Rugby Officer Nigel Cass said: It's a credit to Tana, that he has put the team before himself, including ensuring there is continuity into the new season."
Umaga said: "I've learned a lot about the unique situation of the Blues and I will support and share those experiences with Leon, Tom and Daniel to best help bring success back to this club. At the same time my primary focus is on the really vital role as Defence Coach."