Gibbons made the announcement to the team Wednesday afternoon, the school said in a statement. His assistant coaches will now assume all coaching duties while Gibbons is on voluntary, paid administrative leave.
The announcement comes a day after former player Ashley Cooper, 20, sued Gibbons and the school. Cooper says that Gibbons grabbed her, shook her and hit her at different times and that the school covered up the behavior.
Cooper's attorney, Elizabeth Eilender, said she's pleased Gibbons isn't running the team anymore because Cooper sued, in part, to force changes at Holy Cross. But she added the school deserves no credit for the move.
"This is damage control by them," Eilender said. "They knew they had a problem. Now the rest of the world knows they have a problem, and they can no longer deny it."
Gibbons did not return an email sent Wednesday seeking comment.
Cooper's suit says Gibbons yanked and pulled her by the shirt collar, shook her by the shoulder and struck her on the back during a game, leaving a red handprint.
It paints Gibbons as so volatile that opposing players would remark, "Your coach is crazy," and the players as so demoralized that alumni basketball games are impossible because players won't return to the Jesuit school in Worcester to participate.
The suit accuses Holy Cross of failing to turn over game tape that could show Gibbons striking Cooper and another player. It says the school has also refused to release results of an investigation into Gibbons' behavior.
Cooper gave up a full scholarship and left the school amid fear of physical pain and retaliation for complaining about Gibbons, according to the lawsuit, filed Tuesday in New York City, where Cooper lives.
Because of the abuse, "Cooper and other players suffered a loss of self-esteem and a loss of their love of the game of basketball," the suit said.
Cooper is seeking compensation for the costs of the college education she'll have to pay for after giving up her scholarship, as well as unspecified punitive damages.
In a statement, school spokeswoman Ellen Ryder said the "physical, mental and emotional wellbeing of our students is our highest priority at Holy Cross."
The school said it investigated previous complaints by Cooper and found them unsubstantiated. But Ryder said Cooper's lawsuit "includes a series of new allegations and we will now bring in outside counsel to review them."
Gibbons has 533 wins in 28 seasons as women's head basketball coach at Holy Cross and has led the team to 11 Patriot League championships.
Cooper, of Colts Neck, N.J., played in 21 of Holy Cross' 32 games last season, averaging 4.7 points per game and hitting 40 percent of her 3-point shots. She has transferred to New York University but is not on the women's basketball team, Eilender said.
The lawsuit says Gibbons' behavior was worse than Rutgers University men's basketball coach Mike Rice, who was fired this spring after practice tape surfaced showed him berating and kicking players and throwing basketballs at them.
In the suit, Cooper says she's bringing legal action "not only on her own behalf but also on behalf of all women athletes who are abused by their coaches under the grossly offensive rationale that the abusive behavior is 'motivational.'"