The decision was made as part of a settlement between Bill Lucero and the American Civil Liberties Union (ACLU) Foundation of Oregon.
In a press release, the AACLU said Lucero "repeatedly failed to respond to LGBTQ students complaints" during his tenure at North Bend High School, in Oregon.
Hailey Smith and Liv Funk filed complaints with the state in 2016.
The have both agreed to no longer pursue legal action against the district.
The school resource officer - who is alleged to have told Funk she was going to hell for being gay -will also be asked by the school district to step down.
As part of the settlement, North Bend High will donate $1,000 to a LGBT advocacy group, the ACLU has reported.
Smith and Funk, along with other students who spoke with the ACLU, said that not all staff in the school are unsupportive of LGBT students.
"I think there are a lot of teachers, staff, and community members in North Bend who do support LGBTQ students," Smith said in a statement.
"Under a more supportive school administration, I hope they will no longer be afraid to show their support."
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