Ann Marie Bledsoe Downes, a deputy assistant secretary, took over as acting director.
The Bureau of Indian Education oversees nearly 200 schools serving American Indian children in some 20 states, mostly on rural reservations.
The Inspector General began looking into Roessel in July 2014 after an unidentified bureau official alleged Roessel abused his position to help the woman and a close relative of Roessel secure jobs.
Roessel, a longtime Navajo educator, administrator and writer, did not respond to an email from The Associated Press seeking comment.
A human resources official said he didn't feel pressured to hire the woman and didn't view it as improper either but told investigators that, in hindsight, he should have warned Roessel against it.
