The 34-year-old supermodel has fronted campaigns for the British make-up company since 2001, but bosses now want to replace her with someone younger.
A source told Britain's Daily Mirror newspaper: "There have been rumblings for some time about Kate being replaced by a younger model. She's been amazing for the brand, but they want a fresh face."
The favourite to take over from Kate is 24-year-old British TV presenter Alexa Chung, who is currently romancing Arctic Monkeys frontman Alex Turner.
The source added: "Alexa is one of the hottest faces out there. Not only is she beautiful, she's savvy, sexy and has lots of attitude."
New Bond girl Gemma Arterton is also in the running, while models Agyness Deyn, Daisy Lowe and Lily Cole auditioned but failed to make the cut.
However, Rimmel insisted Kate - who was recently replaced as the face and body of lingerie giants Agent Provocateur - is still contracted to them.
Spokeswoman Emmanuelle Bonte said: "Kate remains the face of Rimmel London and will continue to appear in campaigns for the foreseeable future.
"Rimmel London has no plans to replace Kate. We are very happy with the collaboration."
Kate - whose career looked ruined after she was pictured snorting what appeared to be cocaine in 2005 - has lucrative contracts with TopShop, Virgin Mobile and Calvin Klein.

Kate Moss is set to be dropped as the face of Rimmel London.