French media reports in December linked Kaino with Toulon as a replacement for Vermeulen, who will return to the Stormers for Super Rugby when Toulon's season ends.
Toulon owner Mourad Boudjellal on Wednesday (Thursday NZ time) confirmed the 39-test Springbok was heading back to South Africa.
"Vermeulen is leaving, he will be replaced by an international level player that we will announce in the next 48 hours," Boudjellal said.
"Duane is leaving because he wants to prepare for the World Cup [in Japan in 2019] - we had offered him a contract that corresponded to the amount of time he works."
Kaino's contract with New Zealand Rugby runs through to the end of 2018.
The 34-year-old 81-test veteran lost his starting place in the All Blacks No 6 jersey after withdrawing from the squad in August for personal reasons ahead of last year's opening Bledisloe Cup test against Australia in Sydney.
Liam Squire and Vaea Fifita have moved up in the pecking order ahead of Kaino, who did start all three tests in the drawn series against the British and Irish Lions in 2017.
Kaino played for Auckland for the first time since 2010 during last season's Mitre 10 Cup.
The two-time World Cup winner was forced to head home last November from the All Blacks' end-of-year tour because of a posterior cruciate ligament injury suffered playing against the Barbarians at Twickenham.