Mr Stone was dumped at a meeting of the iwi's central Te Runanga o Ngai Tahu (Tront) committee held in Christchurch yesterday afternoon.
It is understood he was ousted after seeking a vote of confidence from Tront and being told he would not get one.
Mr Stone, who set up the successful Kaikoura Whalewatch operation and also sits on several other business and tourism boards, was believed to be travelling back to his Kaikorai home last night and could not be reached for comment.
Tront chairman Mark Solomon confirmed Mr Stone's departure in a press release and said corporation board member Linda Constable had been appointed interim chairwoman.
She has been on the board since 2005 and is also on the boards of the Electricity Commission and KiwiRail.
Mr Solomon would not comment further when contacted by the Otago Daily Times last night, saying "I can't talk to you about that", when asked if Mr Stone had been sacked.
He referred comments to iwi media spokesman Phil Tumataroa, who confirmed Mr Stone had gone but would not say why.
Tront has 18 members who represent local iwi committees, or runanga.
Four runanga leaders spoken to by the Otago Daily Times last night said they could not understand why Mr Stone had been sacked, particularly as he had been responsible for a significant improvement in the corporation's financial result during his two years at the helm.
The organisation, which manages a $600 million asset group involved in property, tourism and seafood, produced a record operating surplus of $31.8 million in the 2007-08 financial year.
Kaikoura runanga chairman Thomas Kahu said it was "absolutely unthinkable" that Mr Stone should be sacked.
"He has led our tribe out of difficulties.
''The latest results are exceptionally strong.
''I am prepared to shake trees and find out what the rationale for the decision was."
''They [Tront] want to run the corporation from the centre and get rid of the corporationDunedin's Otakou runanga chairman Tahu Potiki called it "an abysmal decision".
"He has provided some pretty solid leadership.
''He took us from a critical point and has grown the business.
''Everyone has been very supportive of his business results, but somewhere in the boardroom the relationship has broken down."
''Mr Potiki said the "texts and phone calls have been flying" yesterday as the news spread.
''However, he was not sure iwi members would be able to reverse the decision.
"Tront has the authority to remove people, if it wishes.
''I'm not sure this decision can be challenged, however foolish it may be."
West Coast Te Waewae runanga chairman Francois Tumahai was "appalled" by the decision.
He speculated Mr Stone's sacking had been "payback" for his support for attempts by a group of Tront members known as the "tight nine" to oust Mr Solomon.
Those efforts began in 2006, and the following year Mr Stone and others tried to entice Mr Solomon to resign by offering him a $300,000buyout of his contract.
Mr Tumahai said yesterday's decision was about power, and control of iwi assets.
"They [Tront] want to run the corporation from the centre and get rid of the corporation."
He said his runanga representative at the meeting, Lisa Tumahai, had told him she had walked out of the meeting in protest at the resolution to sack Mr Stone and had not voted on it.
Ms Tumahai could not be reached for comment last night.
