"It's a restructuring," Gibson said. "This is not a reflection of Patrick Kelly's service to the department, and we wish him well."
Kelly was not present at the meeting, and attempts to reach him by phone Wednesday were unsuccessful.
The commission appointed Assistant Chief Thomas Kolbe as acting chief.
Kelly became director of the Cherry Hill Fire District in December 2012. The district covers 71,000 people and has a budget of nearly $28 million.
Former colleagues from other cities said Kelly was known for strong opinions that both benefited and threatened his career.
In 2011, he resigned as fire chief in Tucson, Ariz., after a spat with city officials over whether some of them should have been able to live outside the city, which he opposed. Amid rumors that he was forced out, Kelly said he left by choice.
"I think that Pat is opinionated to the point where sometimes he can rub people the wrong way," said Harold "Bud" Phillips, who said he has known Kelly for 10 years. Phillips is chief of the Ridge Road Fire District in Upstate New York.
Unlike Kelly - who in nine years has been chief or director in three parts of the country - most fire chiefs stay in the same place, Phillips said. Those who move around, Phillips said, must fit in with the culture of new departments and not force change.
Prior to Tucson, Kelly worked as fire chief for three years in DeLand, Fla., a city of nearly 28,000 people north of Orlando. City Manager Michael Pleus, who was one of Kelly's bosses, said Kelly could be vocal, but was always respectful.
"I respect department heads who tell you what you need to hear and not what you want to hear," Pleus said. Kelly, who had aspirations to run a larger department, left DeLand for Tucson on good terms, Pleus added.
The termination in Cherry Hill has broader implications for Kelly.
He will likely have to vacate his presidency of the Executive Fire Officers Section of the International Association of Fire Chiefs. The section advocates for proper training and information sharing among fire chiefs.
Phillips, who is vice chairman of the section, said someone who is not a fire chief cannot be its head.
Kelly's departure comes slightly more than a month after a state audit criticized the Cherry Hill district as overpaying firefighters and giving them hefty "longevity payments," or bonuses for each year of employment.
The audit, which covered 2010 and 2011 - before Kelly's arrival - said that in the latter year, Cherry Hill firefighters started at a salary of $50,099, about $10,000 more than firefighters in New York City and Philadelphia. Mayor Chuck Cahn called the findings "troubling" and said the spending was unsustainable.
Gibson said the district had lowered starting salaries and eliminated longevity payments before the audit came out.