Club president Sandro Rosell made the announcement late on Friday that Vilanova, who has been battling throat cancer the past two years, needed more treatment that meant he would be unable to remain in charge of the first team.
A replacement for the 44-year-old, who was promoted from assistant coach to succeed Pep Guardiola at the end of the 2011-12 season, would likely be announced early next week, Rosell added.
Many of the first team squad were at Rosell's news conference, including World Player of the Year Lionel Messi, and the club cancelled a friendly they were due to play against Polish side Lechia Gdansk on Saturday and suspended training until Monday.
"Life goes on," Rosell said. "Obviously this is a very hard blow to take but Barca has suffered many blows in our history and we have always come through. This will be no different."
Vilanova posted an open letter on Barca's website on Saturday in which he expressed his gratitude for the messages of support that have flooded in from the world of sport and beyond.
"The treatment I have to have, according to the doctors, is not compatible with me dedicating myself 100 percent to the real tasks of a coach of a team as demanding as FC Barcelona," he wrote.
"But I will stay very close and continue to work for this club which I love so much doing other jobs," he added.
Meanwhile the wait for a successor to be named continues, with less than a month to the start of the new La Liga season.
Barcelona-based newspaper La Vanguardia reported that Joan Francesc Ferrer, known as "Rubi", could be in line to take over, while daily Sport said the former Girona coach might be a temporary replacement.
Ferrer led Girona to the second division playoffs last season and was appointed Vilanova's assistant for the coming campaign to help with technical analysis of Barca's rivals.
Other names mentioned, all former Barca players, were Swansea's Danish manager Michael Laudrup, Celta Vigo's Spanish coach Luis Enrique and Dutchman Frank de Boer of Ajax Amsterdam.
Jupp Heynckes, who led Bayern Munich to an unprecedented treble of Bundesliga, German Cup and Champions League titles last season before being replaced by Guardiola, and Argentine Marcelo Bielsa, who was in charge at Athletic Bilbao until the end of last term, were also named as possible candidates.
German Heynckes, who turned 68 in May, had a stint at Bilbao before leading Barca's arch rivals Real Madrid to the Champions League title in 1998.
His reputation was enhanced when Bayern thumped Barca 7-0 on aggregate in the semi-finals of Europe's elite club competition last season and he was complimentary about the club after the second leg.
"I know Spanish football very well, especially Barcelona," he told a news conference.
"I know the way they like to play and their philosophy. Barca are not only an extraordinary club but a fantastic team."
Barca are due to play a friendly against Bayern in Munich on Wednesday and they launch their bid for a fifth La Liga title in six years at home to Levante on the weekend of August 17/18.
The first leg of the Spanish Super Cup against King's Cup winners Atletico Madrid is on August 21 at Atletico's Calderon stadium and the return leg is a week later at the Nou Camp.
(Editing by Peter Rutherford/Alan Baldwin)
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