FC Cincinnati head coach Ron Jans has quit the club after it was alleged he used a racial slur.
Dutchman Jans initially "stepped away" from his duties on Friday as an independent investigation looked into the claims made against him.
Now the 61-year-old has had his resignation accepted by Cincinnati, who said his departure was "the best course of action for everyone involved" with the club.
The MLS Players Association (MLSPA) said on Friday it had been "made aware of extremely inappropriate comments" made by Jans and called for an "immediate and thorough league investigation".
That has led to Jans, appointed last August, cutting his ties with the team with immediate effect.
The Athletic alleged Jans used the 'N-word' in the company of a number of players earlier in pre-season, and reported that members of the team met with an attorney regarding the incident.
FC Cincinnati president Jeff Berding said in a club statement: "As Major League Soccer's investigation unfolded and some themes emerged, Ron offered his resignation and we agreed that it was the best course of action for everyone involved with FC Cincinnati.
"We place the utmost importance on a strong culture within our club, beginning in our locker room, and that every person connected with FC Cincinnati feels valued, respected and trusted.
"Racial and cultural diversity is a major part of what makes the game of soccer so special, and we place the highest priority on respecting every person involved in our game.
"This includes absolutely everyone associated with our club, from our locker room and front office, all the way through to our fans."
Jans has yet to make a public comment on the accusation.
The dramatic development comes just 12 days before Cincinnati begin their MLS season against New York Red Bulls.
Frenchman Yoann Damet, who has been at Cincinnati for three years, takes over as interim head coach.
The club said general manager Gerard Nijkamp was beginning the search for a permanent new first-team boss.