The federal senator and party matriarch wrote to members of the state executive calling for the group to be disbanded, effectively calling an end to Mr Latham's four-year stint at the helm.
A replacement executive had been put in place and the position of state leader was declared vacant, Senator Hanson's office told AAP on Monday.
"Nobody has been sacked from the party as such," the spokesman said.
The decision won't affect Mr Latham's position in NSW parliament, where he has an upper-house seat until 2031.
The firebrand MP was the face of the party's state election campaign in March after resigning from the seat he won in 2019 for an attempt to win the party another two positions.
But the party did not reach the heights of 2019, with its vote falling one percentage point to 5.9 per cent of the upper house vote.
That was enough to elect Mr Latham but not a second MP.
Mr Latham and Senator Hanson fell out following the NSW politician's homophobic slur towards fellow state parliamentarian, independent Alex Greenwich.
"I want you to know I don't condone them (Mr Latham's words) and neither do my members of parliament or party associates," she told supporters in March.
Mr Latham has been contacted for comment.
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