The Somaly Mam Foundation was founded in 2007 and has raised millions of dollars for its cause.
Newsweek published an article May 21 saying co-founder Mam, in fact, lied about her history of being sold into sex slavery as a child growing up in Cambodia.
The foundation hired a law firm to independently investigate the claims.
As a result, Mam resigned from her position with the organization.
"As a result of (the law firm's) efforts, we have accepted Somaly's resignation effective immediately," foundation executive director Gina Reiss-Wilchins said. "Despite the foundation's heartfelt disappointment, we remain grateful to Somaly's work over the past two decades and for helping to build a foundation that has served thousands of women and girls.
"The foundation's commitment to eradicating the trafficking and sexual exploitation of women and girls in Southeast Asia remains steadfast, and we ask that you continue to stand with us in the face of these challenging times," she added