"Over these last nine months, I have given my all to this organization, but after much reflection, I have decided that it is best that I step back and resign from my position as head coach of the Cleveland Cavaliers and assist the organization in a different capacity," Beilein said in a statement.
He added: "This was a very difficult decision for me, but I want to be clear - this was my decision to step down and I truly appreciate the understanding and support of the front office during this time. I find losing very challenging and this year has taken a much bigger toll on me than I expected."
Beilein's new role is still unknown, but his contract reportedly covers the next four seasons at an annual salary of $4 million to $4.5 million.
The Cavaliers also confirmed J.B. Bickerstaff will assume head coaching duties.
Beilein was a surprise hire last spring by the rebuilding Cavaliers. He had previously spent his entire coaching career in the college ranks, including 12 successful years at Michigan.
The 66-year-old appeared to lose Cleveland's young locker room almost immediately, with issues coming to a head in January when he referred to Cavaliers players as "thugs" during a film session in an apparent attempt to say "slugs."
Reports surfaced Wednesday that players began playing music with the word "thug" in it around Beilein after the incident.
Bickerstaff, 40, takes the reins after two previous short-lived head coaching stints. He compiled an 85-131 record with the Houston Rockets and Memphis Grizzlies from 2015 to 2019.