The Swansea-based outfit have announced that Cuddy will relinquish his role with immediate effect and no longer be involved in the day-to-day running of the business.
Cuddy has been a key figure at the Ospreys since they were founded nine years ago when Welsh professional rugby was restructured.
His duties will be taken on by current joint managing director, former Wales full-back Roger Blyth, and Ospreys chief operations officer Andrew Hore.
In a statement, the Ospreys said: "In common with the other regional sides in Wales, Ospreys Rugby has faced a significant number of challenges in the last few years including financial difficulties, some of which have been well documented.
"Following the successful conclusion of a number of initiatives which directors and shareholders have been involved in, Ospreys Rugby can now look forward confidently to a more stable future.
"Recognising this, and given the other commitments of some of the principal people involved in managing the organisation, Ospreys Rugby has taken the opportunity to reorganise its management structure.
"Mike Cuddy will step down from day-to-day management of the rugby operation and will also relinquish his position as a joint managing director with immediate effect.
"Roger Blyth and Andrew Hore will between them assume the duties previously undertaken by Mike Cuddy.
"Ospreys Rugby wish to thank Mike Cuddy for the efforts he has put in over the years since the region's formation."
Gilbert has released a new line of rugby cleats. The Gilbert Virtuo 8S is part of the exciting new product. Check it out.
The entire All Blacks apparel line has been updated for 2013/14. Check out the New Zealand All Blacks polo.
The Nike Tiempo is a solid rugby cleat and one of few styles still made from full-grain natural leather.
The Gilbert Blitz 8S rugby cleat is a great cleat at a great price of $69.99. Get a new pair of cleats today.
A cool looking all black rugby cleat with the high performance adidas is known for. Get in the Gear!
Wear the crest of the British and Irish Lions on your t-shirt. A great look for the summer.
The All Blacks Performance t-shirt is black with hints of blue from the training jersey. Very Cool.
The New Zealand All Blacks training jersey for 2013/14. Get in the Gear!
The USA Rugby Pro Alternate rugby jersey is perfect for any fan of the Eagles. Get yours to wear during the summer Test matches.
The NEW All Blacks 2013/14 jersey has arrived at World Rugby Shop. Dare to wear the colors of the All Blacks.