Aidaros Alzubidi's Southern Transitional Council (STC) grabbed swathes of territory last month before being rolled back by the Saudi-led coalition and allied Yemeni forces.
He was due in Riyadh for talks aimed at de-escalating the violence, but his plane ended up being delayed and he was not on board when it departed.
According to the coalition, Alzubidi fled and mobilised "large forces" in Dhale, his home governorate in southwest Yemen, after failing to attend the talks in Riyadh.
Yemen's Presidential Leadership Council, which holds executive power and groups rival factions, then announced Alzubidi's removal, accusing him of high treason.
On Wednesday, more than 15 air strikes hit Dhale, killing four people, two hospital sources told AFP.
Violence between the UAE-supported STC and pro-Saudi forces has spiked in recent weeks around Aden, home to Yemen's internationally recognised government since it was ousted from Sanaa by Iran-backed Houthi rebels in 2014.
The STC's advance and the Saudi response has sent relations with the United Arab Emirates, fellow oil power and rival powerbroker in Yemen, plummeting.
Alzubidi "fled to an unknown location... after he had distributed weapons and ammunition to dozens of elements inside Aden", coalition spokesperson Major General Turki al-Maliki said in a statement.
The coalition carried out new strikes to prevent Alzubidi from "escalating the conflict" and extending it into Dhale governorate, he said.
An STC official told AFP that Alzubidi decided not to join the delegation flying to Saudi Arabia for talks after hearing he would be asked to dissolve his group, which forms part of the Presidential Leadership Council.
Later, the STC said it had lost contact with the delegation following its arrival in Riyadh, expressing "grave concern".
"This raises serious questions that require urgent clarification," the STC said.
Alzubidi "continues his duties" in Aden, the group said, calling on the Saudi-led coalition to halt the air strikes. It said it remained open to talks.
- 'Grave crimes' -
The Presidential Leadership Council announced Alzubidi's removal, accusing him of committing several crimes, including "high treason" and "engaging in armed insurgency".
"It has been established that (Alzubidi) has abused the just cause of the South and exploited it to commit grave crimes against civilians in the southern governorates," it said.
More than 100 people have been killed in the Saudi-led coalition's strikes on the separatists' positions and in clashes on the ground.
The Saudis and Emiratis have long supported rival factions in Yemen's fractious government, after they had initially joined forces in the Saudi-led military coalition against the Houthis.
A security official in Aden told AFP that the task of securing Aden has been assigned to forces and the Aden police which are all controlled by STC vice-president Abdulrahman Al-Mahrami, a deputy chairman of the Presidential Leadership Council.
These forces have been deployed in the streets and government buildings, including the presidential palace, the official said.
Another security official told AFP that two days ago, the STC evacuated its headquarters in Aden and moved the operations of its TV channel to an unknown location for fear of Saudi bombing.
Last week, after separatist forces grabbed resource-rich Hadramawt province bordering Saudi and neighbouring Mahra, on the Oman frontier, Alzubidi announced a two-year transition towards creating a new country, "South Arabia", in Yemen's south.
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