The 62-year-old stood down on Thursday night amid an allegation he was involved in an incident with 19-year-old defender Remie Streete after the Newcastle Under-21 team lost 2-0 at Sunderland on Monday night.
A club statement said: "Newcastle United can confirm that Willie Donachie has resigned from his position as reserve team manager with immediate effect. The club will be making no further comment."
Donachie spent over four years at Newcastle, joining in December 2009 as an academy assistant director, moving to the role of development coach and, for the past two years, taking charges of the reserves.
Confirmation of his departure came as Newcastle attempted to re-group after an eventful fortnight which has seen midfielder Yohan Cabaye and director of football Joe Kinnear leave the club in vastly differing circumstances either side of a 3-0 derby defeat to Sunderland in the Barclays Premier League.
Manager Alan Pardew found himself in the firing line as Cabaye's departure, together with Kinnear's failure to replace him and the capitulation against Sunderland, provided fresh ammunition for disgruntled fans.
In the short term, Pardew will prepare a team further torn apart by injury and suspension for Saturday's tough trip to Chelsea knowing there is work to be done during the summer.
Pardew said: "I am very focused. We have a great group of scouts, led by [chief scout] Graham Carr, who have always been working in the background.
"We have got a list, as we did in the last window, and we will work towards that list.
"Obviously, we have got a lot of work to do because actually this summer, we have got a few changes to make.
"We have got a few players out of contract, we have got one or two areas that we really need to strengthen, so I don't think we are under any illusions that we have got a bit of work to do this summer."
Kinnear's exit on Monday night followed a second successive transfer window during which he managed to make only one loan signing, and it remains to be seen whether owner Mike Ashley opts to appoint a replacement.
Pardew admits he does not know how the club's transfer plans will be implemented from now on, but has no doubt over the message he will deliver to Ashley when they finally do meet.
He said: "My message is always the same, it's about taking the club forward. We can't stand still, we have to go forward, so it gives us an opportunity to do that."
Newcastle will head for Stamford Bridge without midfielder Cheick Tiote who is set to miss at least two games with a hamstring injury. Fabricio Coloccini, Yoan Gouffran and Papiss Cisse remain out, while Loic Remy serves the second phase of his three-match ban.