"Maj. Gen. Harrison was investigated and disciplined for failing to properly address a sexual assault allegation in his command," a statement from the Army said.
Harrison was suspended in June 2013 while in charge of U.S. Army forces in Japan for failing to investigate a reported sexual assault properly.
The U.S. military has come under fire in recent years for failing to fully investigate claims of sexual assaults within its ranks.
Under federal law, military officers may only retire at the pay grade at which they last served satisfactorily. With his demotion, Harrison is likely to get several hundred dollars less per month than he would have had he not been demoted.