Handscomb made his final appearance for the club in yesterday’s NatWest T20 Blast match against Notts at Trent Bridge.
The 26-year-old, who is open to the prospect of returning to Headingley, is leaving to take part in a training camp ahead of his country’s tour to Bangladesh. He is being replaced by Pakistan captain Sarfraz Nawaz for the final five group games and for any knockout fixtures.
Handscomb had a mixed time of it at Headingley, performing outstandingly well in the Royal London Cup, but less successfully in the County Championship and the T20 Blast.
The right-hander hit 504 runs in nine Royal London matches at 63; 441 runs in nine Championship fixtures at 33, and 97 runs in seven T20 Blast games at 16.
Martyn Moxon, Yorkshire’s director of cricket, said: “Pete is someone that we’ll certainly keep in touch with and we won’t rule out him coming back at some stage in the future.
“Overall, he’d have liked to have scored more runs, but he’s someone we signed as a talented young player and, as we know at times with young players, there can be a little bit of inconsistency.
“I think that Pete will have learned from his experience over here and the pitches that we play on and he’ll only get better.
“He’s an outstanding young man, and he’s a very talented, down-to-earth character who has been a pleasure to work with.”
Sarfraz, a direct swap for Handscomb as a wicketkeeper-batsman, will debut in Yorkshire’s next T20 match against Derbyshire at Headingley on Thursday.
“We looked at the balance of the T20 team and Sarfraz fits into that perfectly to take over directly from Pete,” said Moxon. “He’s a very intelligent and experienced cricketer and just what we need”
Sarfraz, 30, will play alongside Yorkshire’s other Australian overseas import, Shaun Marsh, in the T20 Blast, with Marsh filling in for Handscomb for the rest of the Championship campaign – a tournament in which clubs can only field one overseas player at a time.