Hancock joined Exodus in March 1998 as president and was promoted to CEO in September of the same year.
But in recent months, Exodus has been hit with myriad problems due to the struggling economy. In July, the company reported second-quarter losses of $583m (£402), compared to a loss of $51.8m in the previous year. Hancock said the company was cutting costs and expected to achieve better cashflow in the third quarter of 2002.
Exodus announced plans to shed a further 500 of its 3,500 staff, after it had let around 675 workers go in May. Last month, three members of the board resigned for "personal reasons".
In an announcement, the company revealed that Hancock would be temporarily replaced by board member L William Krause, the chairman of 3Com until 1993.
Krause said in a statement: "The focus now is to implement an operating plan that reflects the realities of a tough economic environment.
"We agreed with Ellen that it's time to transition the leadership of the company as it manoeuvres through challenging times."