The actress first joined the soap in 1988 as meddling Colleen Smart (née Hickey) for two years, before returning in 1999 as a regular character.
Collingwood's castmate Luke Mitchell - who plays Romeo Smith in the soap - revealed that her exit was "very sad".
"She's been around nearly as long as Ray [Meagher, who plays Alf]," Mitchell told TV Week.
"I really enjoyed working with her and she's one of my favourite characters to watch on screen."
Colleen's exit was filmed a few months ago and will be aired in Australia in the near future.
Mitchell's off-screen girlfriend Rebecca Breeds (Ruby Buckton) is also rumoured to be leaving the series.
The actor explained: "I can't confirm or deny [if she's left]. She has been on the show for a while but there are a few of us that have been. That's not to say she's left..."
Home and Away airs on Channel 5 in the UK and on the Seven Network in Australia.