Mr Grant, who had been at Lucas for four years, is being replaced by Neil Arnold, who was chief financial officer at Varity for six years before being put in charge of corporate development when the two companies merged. Mr Arnold will not be on the board of LucasVarity, meaning that the company's only executive director now is its chief executive, Victor Rice, the former head of Varity.
The group denied that Mr Grant had clashed with Mr Rice or that they had fallen out over group strategy, which involves shedding 3,000 workers and disposing of 13 subsidiaries, all of them former Lucas businesses, over the next two years.
A spokesman said the board had decided to terminate Mr Grant's contract because it needed "someone who was more global in orientation and more experienced".
Mr Grant was on a two-year rolling contract and received a salary, including perks and pension entitlements, of pounds 288,000 in the year to the end of July. The spokesman said his contract, which was terminated last Friday, would be met in full.
News of Mr Grant's departure sent shares in LucasVarity 6p lower to 226.5p.