Struggling in exhibition play, Mercado was optioned to the team's depth camp on Sunday, continuing his slide after a promising rookie season.
Mercado entered spring training as the favorite to win the starting job in center field, but the 26-year-old has continued to have problems at the plate and the Indians want him to get some extra work with Triple-A Columbus.
"He needs some time and, when I say space I mean not major league games hanging over his head, to get him back to where he can help us," manager Terry Francona said Sunday on a Zoom call from Goodyear Arizona. "We've seen it. He's seen it. He's felt it.
"Nobody's giving up on him, and we wanted to make sure he understood that."
Mercado's batting averaged plummeted to .128 in 36 games last season. He hit .269 with 15 homers and 54 RBIs in 115 games as a rookie in 2019.
Mercado was hitting .214 with one RBI in 10 spring games this year.
Francona said the team talked to Mercado for "a long time" on Sunday.
"We didn't want him to feel like he was on an island," Francona said. "And I think mentally he has beaten himself up. And I think he kind of owned up to that, too, and that's part of it."
Francona felt Mercado understood the reasons behind him going to the minors.
"We also said, 'Take today and take a deep breath,'" Francona said. "We want it to be in a place where it's going in the right direction. And at the end of our meeting, I was really pleased. I said, 'Oscar, this can be an opportunity for you if you view it like that.' And he said he did. And that was big. "
The move with Mercado wasn't the only slight surprise as Francona said right-hander Trevor Stephan, a Rule 5 selection, will make Cleveland's Opening Day roster.
Stephan has had a strong spring and the 6-foot-5 right-hander will give Francona another big arm in his reconfigured bullpen.
"We kept him on our ballclub because we think he has poise," Francona said. "We saw him fight back from a tough outing against the Dodgers. There's a lot to like about this kid.
With Mercado no longer in camp, the Indians' starting job in center will likely go to Bradley Zimmer, who has been slowed by injuries in recent seasons, or Ben Gamel, who signed a minor league deal with the club this winter and has played well.
The Indians are also trying Amed Rosario in center. An infielder with the Mets, Rosario came over as part of the package Cleveland got back for Francisco Lindor in January. Rosario made three errors in one game earlier this week.