Current chairman, Richard Elliot, will act as executive chairman while a search for a new chief executive officer is undertaken, the company said in a statement to stock exchange.
The boardroom shuffle comes after months of tension between Mr Allchurch and Amity's biggest shareholder, Tony Barton. Though the two men have worked together for 15 years, they in were in disagreement over the future direction of Amity Oil.
According to industry insiders, Allchurch was keen to expand Amity's gas production from its 50%-owned Gorcerler gas field in the Thrace region of western Turkey. He saw no need to start paying dividends from the gas profits.
Mr Barton, who controls 10% of Amity, on the other hand wanted exploration work to be accelerated and the company to start paying dividends as soon as possible.
Late last month, to ease tensions between the two, Mr Barton was invited to become a director but he declined, and instead issued a 14-point request for changes at the company, including the replacement of Allchurch as MD.
Amity Oil stock is currently trading unchanged from yesterday at 71c, though some analysts value the stock as high as $1.35 due to the potential of Gocerler and nearby gas fields.
