Japan beat New Zealand in Rio, eventually finishing fourth overall, and Karauna said his aim was to build on that success at the Games in Tokyo in 2020.
"After the success in Rio, our team will continue to grow by developing new players and achieving consistent results," he told Japan's Kyodo news agency.
Segawa was disappointed by the decision to replace him.
"My next aim was to win a medal at the Tokyo Games and to be told I'm leaving despite having such motivation was frankly disappointing," he said in a statement.
"I believe the JRFU judged that a next step was needed in order to win a medal in 2020.
"I take pride in having this passion more than anyone. I'll keep studying hard and if I have a chance I'd like to come back to work in sevens."
Keiko Asami, who coached the Japanese women's team, has also stepped down, with Hitoshi Inada replacing her on an interim basis.
(This refiled version of the story adds source as Japan's Kyodo news agency)
(Reporting by Debanjan Bose in Bengaluru; Editing by John O'Brien)
