The resignation of Grand Master Matthew Festing, confirmed by the order today, follows a month-long stand-off that had become a test of the reforming pope's authority over rebellious Church conservatives.
"The Grand Master was received on Tuesday by Pope Francis who requested his resignation, which the Grand Master agreed to," a spokesman for the Order told AFP.
In theory, Briton Festing was in the job for life. His resignation will have to be approved by the Order's sovereign council.
The row erupted last month when Francis appointed a five-strong team to examine the circumstances in which the Order's number three was forced out of his job.
The Knights, a Church-linked charity body descended from the crusaders of the Middle Ages, refused to cooperate.
They said the December dismissal of Grand Chancellor Albrecht von Boeselager was an internal affair.
Festing subsequently claimed in a leaked letter that three of the Vatican's appointees had a conflict of interest because of links to a Geneva-based fund in which the Order also had a stake.
Von Boeselager's dismissal had been seen by some as being the result of him being too liberal for Burke, who has acted as the Vatican's liaison with the Order since being sidelined from more important roles by Francis.
Others said the issue was whether the Vatican was properly kept in the loop and whether Von Boeselager, who has a brother who is said to be close to Francis, was wrongly informed the pope had approved his sacking.
Burke is a prominent conservative figure who has been outspoken in his criticism of Francis's efforts to reform Church teaching on questions related to the family, marriage and divorce.
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