Mahato was replaced by Ajit Maity, currently party president of West Midnapore. Maity will now have the dual responsibility of heading both Jhargram and West Midnapore.
"Churamani Mahato has been removed as Jhargram district president because his performance was not up to the mark," a senior TMC leader said.
Mahato, minister of state backward classes welfare, is considered to be a close associate of Roy.
Earlier in the day, the chief minister during an administrative meeting in Jhargram, reprimanded Mahato for his failure to work at the ground level.
Roy is likely to resign as a Rajya Sabha MP during this week.
Meanwhile in Kolkata, TMC secretary general Partha Chatterjee mocked Roy for making "desperate attempts to please BJP" and said his political career will soon cease to be.