The 54-year-old former Norwich and Wigan manager was appointed to the role in January on a short-term contract.
But Argyle chairman James Brent revealed Deehan's deal would not be extended, telling the club's official website: "We would like to thank John for his valuable input.
"He provided our management team with important back-up as we successfully won our vital battle to remain in the Football League.
"John leaves Home Park with our very best wishes for his future career."
The news of Deehan's departure comes shortly after the announcement that Pilgrims manager Carl Fletcher had agreed to sign a new one-year rolling contract.