56-year-old Babcock has been head coach in Toronto since the 2015-16 season. He has led the team to the playoffs in all seasons except one, but the recent line of results became the drop for the leadership of the club.
Toronto, with Swedish stars like William Nylander and Andreas Johnsson in the squad, has scored ten goals in the last two matches and is ten in the Eastern Conference.
On the club's website, Babcock is thanked for his services.
"Mike's dedication and tireless work ethic has developed our organization and we are extremely grateful and appreciate what he has helped us to build here," said club president Brendan Shanahan.
Babcock is replaced by Sheldon Keefe, who has been the head coach of the Toronto Marlies Pharmaceuticals team in the AHL for the past five seasons.