The scandal revolves around anonymous online comments by high-ranking prosecutors in his office; Letten's longtime first assistant, Jan Mann, was involved, The (New Orleans) Times-Picayune reported.
Landfill owner Fred Heebe, the target of a federal investigation, filed a civil suit alleging prosecutor Sal Perricone had been using an online alias to attack him and other federal targets in comments posted at NOLA.com, the newspaper reported.
Perricone admitted the allegation and resigned.
Last month, Heebe filed a second defamation suit claiming Mann had been commenting about federal targets and judges as "eweman" on NOLA.com. The newspaper said Mann soon resigned.
In a news conference, Letten, who has been with the U.S. Justice Department for 28 years and U.S. attorney for 11 years, said his resignation was effective Tuesday, and he planned to take some time off with his family. The Times-Picayune said he has been in discussions for a job with Louisiana law firm Kean Miller.
Dana Boente, first assistant U.S. attorney for the Eastern District of Virginia who has been a federal prosecutor for 28 years, will serve as Letten's interim replacement, the Justice Department announced.
The department also said John Horn, first assistant U.S. attorney for the Northern District of Georgia, will investigate leaks and other matters in the Danziger Bridge case, an investigation requested by U.S. District Judge Kurt Engelhardt.
Two unarmed people were killed by New Orleans police on the bridge in 2005 days after Hurricane Katrina. Five police officers were convicted in a coverup.