In a statement, the order said it disassociated itself from the book and condemned the "vile attack against the pope".
It said author Henry Sire has been suspended pending the results of an investigation.
Mr Sire had lived in the Knights' grand palazzo in Rome from 2013-2017 while he was researching an official history of the order, entitled The Knights Of Malta: A Modern Resurrection.
At the same time he apparently researched and wrote The Dictator Pope, published electronically in November under the pen name Marcantonio Colonna.
Recently, Mr Sire's true identity was published in conservative Catholic media.
Britain's The Tablet first reported the suspension.
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