Exhibit 10.1

SEVERANCE AGREEMENT AND RELEASE

RECITALS

This Severance Agreement and Release (“ Agreement ”) is made by and between Rajesh Vashist (“ Employee ”) and Ikanos Communications (“ Company ”) (collectively referred to as the “ Parties ”):

WHEREAS, Employee was employed by the Company;

WHEREAS, the Company and Employee entered into a Employee Inventions and Proprietary Rights Assignment Agreement (the “ Confidentiality Agreement ”);

WHEREAS, WHEREAS, the Company granted Employee options to purchase the Company’s common stock (the “ Options ”) under one or several of the Company’s stock option plans (the “ Plans ”) and each such Option is evidenced by an option agreement executed by Employee and the Company (the “ Option Agreements ”)

WHEREAS, the Company and Employee entered into the Vashist Employment Agreement dated August 31, 2005 (the “ Employment Agreement ”);

WHEREAS, Employee’s employment with Company and status as a member of the Board of Directors terminated on October 24, 2006 (the “ Termination Date ”);

WHEREAS, the Parties, and each of them, wish to resolve any and all disputes, claims, complaints, grievances, charges, actions, petitions and demands that the Employee may have against the Company as defined herein, including, but not limited to, any and all claims arising or in any way related to Employee’s employment with, or separation from, the Company;

NOW THEREFORE, in consideration of the promises made herein, the Parties hereby agree as follows:

COVENANTS

1.              Resignation from the Board of Directors .  Employee hereby resigns as a member of the Company’s Board of Directors effective as of the Termination Date.

2.              Consideration .

(a)            Severance .  Pursuant to the terms of the Employment Agreement, upon the Effective Date of this Agreement, Employee will be entitled to the severance payments and benefits set forth in Section 7(a) of the Employment Agreement; provided, however, that (i) the Parties agree that in partial consideration for the Parties entering into the Consulting Agreement and the consideration to be provided thereunder as set forth in Section 2(b), (1) the amount of the severance payment to be provided under clause (B) of Section 7(a) of the Employment Agreement relating to the target bonus will equal $67,000, which will be paid at the times and in the manner set forth in

clause (ii) below, and (2) the provision of continuing benefits under the Benefit Plans (as defined in the Employment Agreement) under clause (E) of Section 7(a) of the Employment Agreement will commence following the termination of the Consulting Agreement, (ii) the severance payments to be made pursuant to clauses (A) and (B) of Section 7(a) of the Employment Agreement will be paid in equal installments in accordance with the Company’s normal payroll policies commencing with the first pay date on or after January 1, 2007 and completing on the last pay date prior to March 15, 2007, and (iii) Employee will have the right at any time prior to January 1, 2007 to designate an exercise schedule with respect to any unexercised options to purchase Company Common Stock, provided such election may not provide for exercise of any such option beyond October 24, 2007.  For purposes of clarification, the Parties acknowledge that the one year period in which Employee will have to exercise his outstanding stock options or similar rights to acquire Company common stock under clause (D) of Section 7(a) of the Employment Agreement will commence on the Termination Date and all of Executive’s equity awards granted by the Company will cease vesting as of Termination Date, except as set forth in the Consulting Agreement, and any unvested portion of the Employee’s equity awards (after taking into account any acceleration of vesting set forth in the Consulting Agreement) will terminate effective as of the Termination Date and Employee will have no further rights with respect thereto.

(b)            Consulting .  Commencing on the Termination Date and subject to this Agreement becoming effective (as set forth in Section 24), Employee will make himself available to serve as a consultant to the Company through December 31, 2006, pursuant to the written consulting agreement (the “ Consulting Agreement ”), attached hereto as Exhibit A .

3.              Confidential Information and Non-solicitation .  Employee will continue to maintain the confidentiality of all confidential and proprietary information of the Company and will continue to comply with the terms and conditions of the Confidentiality Agreement between Employee and the Company, including, without limitation, the non-solicitation provisions of Section 14 of the Confidentiality Agreement.  Employee will return all of the Company’s property and confidential and proprietary information in his possession to the Company on the Effective Date of this Agreement.

4.              Payment of Salary .  Employee acknowledges and represents that the Company has paid all salary, wages, bonuses, accrued vacation, commissions and any and all other benefits due to Employee once the above noted payments and benefits are received.

5.              Release of Claims . Employee agrees that the foregoing consideration represents settlement in full of all outstanding obligations owed to Employee by the Company and its officers, managers, supervisors, agents and employees.  Employee, on his own behalf, and on behalf of his respective heirs, family members, executors, agents, and assigns, hereby fully and forever releases the Company and its officers, directors, employees, agents, investors, shareholders, administrators, affiliates, divisions, subsidiaries, predecessor and successor corporations, and assigns (the “ Releasees ”), from, and agree not to sue concerning, any claim, duty, obligation or cause of action relating to any matters of any kind, whether presently known or unknown, suspected or unsuspected, that Employee may possess arising from any omissions, acts or facts that have occurred up until and including the Effective Date of this Agreement including, without limitation:

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(a)            any and all claims relating to or arising from Employee’s employment relationship with the Company and the termination of that relationship;

(b)            any and all claims relating to, or arising from, Employee’s right to purchase, or actual purchase of shares of stock of the Company, including, without limitation, any claims for fraud, misrepresentation, breach of fiduciary duty, breach of duty under applicable state corporate law, and securities fraud under any state or federal law;

(c)            any and all claims under the law of any jurisdiction including, but not limited to, wrongful discharge of employment; constructive discharge from employment; termination in violation of public policy; discrimination; harassment; retaliation; breach of contract, both express and implied; breach of a covenant of good faith and fair dealing, both express and implied; promissory estoppel; negligent or intentional infliction of emotional distress; negligent or intentional misrepresentation; negligent or intentional interference with contract or prospective economic advantage; unfair business practices; defamation; libel; slander; negligence; personal injury; assault; battery; invasion of privacy; false imprisonment; and conversion;

(d)            any and all claims for violation of any federal, state or municipal statute, including, but not limited to, Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Age Discrimination in Employment Act of 1967, the Americans with Disabilities Act of 1990, the Fair Labor Standards Act, the Employee Retirement Income Security Act of 1974, The Worker Adjustment and Retraining Notification Act, Older Workers Benefit Protection Act; the Family and Medical Leave Act; the California Family Rights Act; the California Fair Employment and Housing Act, and the California Labor Code, including, but not limited to California Labor Code Sections 1400-1408;

(e)            any and all claims for violation of the federal, or any state, constitution;

(f)             any and all claims arising out of any other laws and regulations relating to employment or employment discrimination;

(g)            any claim for any loss, cost, damage, or expense arising out of any dispute over the non-withholding or other tax treatment of any of the proceeds received