Kathie Klages reportedly resigned one day after being suspended during the program's sexual assault scandal.
Two women say they told Coach Klages 20 years ago that Nassar's "treatment" included penetrating them anally and vaginally with his fingers.
The school did not explain the reason behind the suspension, but Klages is named in a lawsuit by athletes against Dr. Larry Nassar and MSU.
MSU gymnastics head coach Kathie Klages retired amid her suspension from MSU on February 14, MSU spokesperson Jason Cody confirmed via email.
Klages' suspension after 27 years as gymnastics coach was announced Monday without any elaboration from Michigan State.
And court documents filed last month allege that in the late 1990s Klages cautioned a different teenage girl who came forward with concerns about Nassar's treatment of her that filing a complaint could lead to "serious consequences" not only for Nassar but for her. Klages also told the girl, according to court documents, that the girl must have been "misunderstanding" or "reading into" the treatment Nassar was providing.
Klages is retiring "out of respect to the university and the gymnastics program".
"It's good to see the university is taking some steps in the right direction", said attorney Jamie White, who is suing Nassar and Michigan State on behalf of a current athlete.
In a statement, Klages' attorney said MSU gymnasts were her top priority and "she would never do anything to put any of them in harm's way". He also worked for Indianapolis-based USA Gymnastics, which trains Olympians.
Michigan State University claims it was unaware of any complaints about Dr. Nassar prior to 2014.
Nassar faces three first-degree criminal sexual conduct charges in Ingham County and three federal charges related to possessing, obtaining or destroying child pornography images or videos.
But instead, Klages focused the meeting on "communications with the media, not law enforcement", and gave a "passionate defense of Dr. Nassar [that] created an emotionally charged environment for the team".
"Dr. Nassar was trusted by Ms. Klages to competently and ethically treat her team members. Had she ever received any information to cast doubt on the appropriateness of that trust in Dr. Nassar, she would have reacted immediately to protect her gymnasts", the statement continued.