Vidosic paid the price for losing the first two games of the new campaign, headlined by a disastrous 6-0 hammering at Adelaide United on Sunday.
The 62-year-old guided City to the premiership last season but oversaw a 6-1 thrashing by Central Coast Mariners in the grand final.
City announced in a statement on Wednesday that former Socceroos captain Vidmar would take the reins until the end of the current campaign.
The Club and Men's Head Coach, Rado Vidosic, have mutually agreed to bring to an end his coaching tenure with immediate effect.— Melbourne City FC (@MelbourneCity) Aurelio Vidmar will join the Club as Men's Head Coach for the remainder of the 2023/24 season.October 31, 2023
Vidosic was moved from coaching City's A-League Women side into the ALM hot-seat in November last year when Patrick Kisnorbo left to join French outfit Troyes.
He was appointed on a permanent basis in February.
Former technical director Vidosic - who also won silverware with the club's ALW side - managed City's men for 25 league games (12 wins, seven draws, six losses).
"We are immensely grateful to Rado for his contributions to Melbourne City over the past five years," the club's CEO Brad Rowse said in a statement.
"From our men's and women's teams to our youth academy, Rado's impact has been significant. We wish him the very best in his future endeavours."
A massive off-season overhaul in personnel - with Marco Tilio, Aiden O'Neill, Jordy Bos and Tom Glover among high-profile departures - didn't help City's start to 2023/24.
The club's new signings are yet to gel, with City exiting the Australia Cup in the semi-finals as they juggled the start of the ALM season with an Asian Champions League campaign.
But Sunday's unacceptable heavy loss to Adelaide clearly forced City's hand.
Sunday's 6-0 hammering at Adelaide spelled the end of Rado Vidosic's time as Melbourne City coach.
Vidmar will take charge for City's Friday meeting with Sydney FC at AAMI Park.
The former Socceroos captain led Adelaide for 73 league games between 2007 and 2010 (25-21-27).
He was Ange Postecoglou's assistant with the Socceroos in the national side's Asian Cup triumph in 2015 and has also coached Australia's youth teams.
Vidmar's most recent coaching post was with Thai club Bangkok United in 2022.
"In Aurelio we have someone whose credentials speak for themselves and who is also committed to playing an attacking, possession-based brand of football that aligns with our own football philosophy," football director Michael Petrillo said.
Vidosic's assistants Petr Kratky and former club captain Scott Jamieson remain in their roles.
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