Billy Ray Hall's salary amount was criticized in the audit, which called it "not reasonable."
The review also questioned the Center's oversight of state money and said it did not verify that jobs were created with grant money. The center's mission is to focus on economic improvement for people in North Carolina's 85 rural counties.
In a statement to the media, Hall announced his "retirement, effective immediately."
"I have devoted my entire career to improving the quality of life for all the people of North Carolina. It has been humbling to see the tremendous impact that the N.C. Rural Center has had in communities across the state. But our work is not finished. From Ahoskie to Bakersville, from Alexander County to Duplin County, it is important that this work continue, and that best can be accomplished under new leadership," said Hall.
Top Republicans in the General Assembly threatened to end funding for the Center after the audit was made public.
Senate President Phil Berger (R) Rockingham called Hall's resignation just a first step.
"While Mr. Hall's resignation is a good first step in cleaning up the blatant abuse of taxpayer money by the Rural Center, it is wrong for him to take a 'golden parachute' severance package under these circumstances. Bringing about fundamental reform requires more than just a change at the top - we must make sure tax dollars go directly to our rural communities instead of the pockets of unaccountable bureaucrats," said Berger in a statement.
With Hall's exit, Senior Vice President Elaine Matthews will now be the point person at the Center. Its next board meeting is not until late August, meaning the president position could remain vacant for a while.
State Budget Director Art Pope wrote to Matthews telling her the state budget office was suspending disbursement of public funds to the group and told the center to stop giving state money to its grant recipients. The center also should stop using state funds to pay employees or for other expenses, Pope wrote.
The state budget office also is considering the further step of recovering state funds held by the center, Pope wrote, with a decision based in part on "a detailed and truthful response" to the audit and other "corrective actions" the center can perform immediately. The amount of funds recovered may be more than $100 million, Pope said.
The recovery would "ensure the funds are used for the original purpose of serving rural North Carolina," McCrory's office said.
Center officials were evaluating Pope's letter Thursday evening and "will attempt to resolve this matter quickly and satisfactorily," spokeswoman Garnet Bass said by email.
On Wednesday, Governor Pat McCrory also called for board chairwoman Valeria L. Lee to be replaced. Insiders tell ABC11 she has no plans to step down.
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