Adel al-Khayat blamed his resignation on "an unjust media campaign" against him, Al Ahram newspaper reported.
"I discussed with my brothers from the party, and we agreed that I should present my resignation as Luxor's governor because we don't want bloodshed", Khayat said in a statement.
"We cannot accept the shedding of even one drop of blood for a position that we never wanted," he said.
Khayat's appointment triggered controversy due to Al-Gamaa Al-Islamiya's role in the murder of at least 58 tourists and 4 Egyptians in a terrorist attack in Luxor in 1997.
The group was also implicated in the 1981 assassination of President Anwar El-Sadat.
President Mohammed Mursi infuriated many by appointing Khayat last Monday, reaching out for a political alliance with the more radical party ahead of a big wave of opposition-led protests on June 30, Al Ahram reported.
Al-Islamiya, which established the Building and Development Party following Egypt's 2011 uprising, is said to renounce violence after the Luxor attack.
Ever since Khayat's appointment, the residents of Luxor, a city in Upper Egypt, have been staging protests and keeping him from reaching the headquarters of the governorate.
His appointment also served a blow to tourism which is already suffering because of the security lax.
Luxor is one of the main tourist attractions and contains the most important Pharaonic monuments.
As the site of the Ancient Egyptian city of Thebes, it has frequently been described as the "world's greatest open air museum", as the ruins of the temple complexes at Karnak and Luxor stand within the modern city.
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