NEW YORK (Reuters) - The fallout from the Cleveland Cavaliers' disappointing postseason continued Friday with the resignation of general manager Danny Ferry after five years on the job.

Ferry and majority owner Dan Gilbert mutually agreed they would not enter into a new contract, the Cavaliers said on their website (www.nba.com/cavaliers).

Assistant general manager Chris Grant will succeed the 43-year-old Ferry, the team said.

The surprising move comes as the Cavaliers try to re-sign two-time league MVP LeBron James, who will become a free agent next month.

"I thought it was critical for there to be as much clarity as possible with the basketball operations moving forward," Ferry told reporters.

The decision also follows last month's firing of coach Mike Brown, whom Ferry had worked behind the scenes to retain, Cleveland media reported.

"Our ultimate goal was to win a championship but it was also critically important to establish a foundation to achieve sustained success and have the ability to contend year in and year out," Ferry said in a statement.

The Cavaliers, who lost to the San Antonio Spurs in the 2007 NBA Finals, made it to the postseason each of the past five years.

But they sputtered in the playoffs, this season being eliminated in the second round by Boston after posting the league's best regular-season record.

(Reporting by Gene Cherry in Raleigh, North Carolina. Editing by Steve Ginsburg)