Lehmann, who took charge as Australia's head coach last year and also recently led the team to a 5-0 cleansweep of Ashes series over England, has been stopped by Cricket Australia from coaching the IPL franchise.
According to a report in "Pune Mirror" Thursday, Lehmann is bound by CA contract and will have to end his association with the Punjab team from this year.
The left-hander had led the now defunct Deccan Chargers to IPL title in the second edition in 2009. He was also part of the coaching staff that took Rajasthan Royals to the silverwar in the inaugural edition of IPL in 2008.
"In Darren's role as Australian coach, he will not participate in the IPL," a CA spokesman told "Pune Mirror".
A Kings XI Punjab official told the newspaper, "He does not have the permission, so we can't avail his services."
The report added that India's bowling coach Joe Dawes is likely to take charge of the team along with former India all-rounder Sanjay Bangar.
"Dawes and Bangar will take care of the team," the official said.