Austrian Father Hermann Geissler resigned as one of three top officials at the Congregation for the Doctrine of the Faith, which ensures Roman Catholic moral doctrine.
"Geissler decided to take this step to limit the damage already done to the congregation and to his community," a Vatican statement said, adding that he "reserves the right for possible civil legal action".
A Canonical disciplinary procedure in 2014 let Geissler off with a warning after German former nun Doris Wagner accused him of inappropriate behaviour during confession.
"He kept me for hours, kneeling before him, he told me that he loved me and that he knew that I loved him and that even if we couldn't marry, there were other ways," Wagner said.
"He tried to take me in his arms and kiss me. I panicked and ran," Wagner said in testimony she put on social media.
Wagner also accused another priest of raping her in 2008.
He was removed from the Vatican but remains a priest in a community where "many young nuns live", according to Wagner.