Mascarenhas was appointed last March, replacing former New Zealand fast bowler Shane Bond.
Mascarenhas said his decision to leave is based around doing the right thing for his family.
"They're my No1 priority. I really need to spend more quality time with my family.
"At first I thought I could balance the responsibilities but I no longer think that's feasible," he said.
New Zealand coach Mike Hesson said he was sorry to be losing Mascarenhas, valuing the "vibrancy" he brought to the group.
"We understand that family comes first and the demands of the international calender are not always compatible with that," Hesson said.
Mascarenhas added he'd valued his time as the Black Caps bowling coach.
"I had an amazing time with the team," he said. "It's probably been the best time I've had in cricket, either as a player or as a coach.
"In the future I hope I can re-visit this sort of role. The children are young now and that's where I need to be. But it's definitely the type of job I'd like to return to."
New Zealand Cricket will begin the process to replace Mascarenhas immediately.