Kenya Rugby Union gave no reason for the sacking of the former South Africa scrum-half, who helped oversee the revival of the struggling team, nicknamed the Simbas, or Lions in Swahili.
“Jerome has been a key influence for the Simbas, guiding the team up the world rankings,” KRU said.
Paarwater, who is also an employee of Western Province, has been in charge of the DHL Western Province under-21 side since 2016.
The Kenyan team is yet to match the success of its Sevens squad, which has emerged as one of the teams to watch in the World Sevens Series which kicked off in Dubai this weekend.
The Shujaa, as the Kenya Sevens side is known, reached the 5th place play-off at the weekend's Dubai Sevens, where they lost against Australia (19 - 12).