The Swiss-born professor has denied two allegations of rape made by French women, as well as further allegations in Swiss media of sexual misconduct against teenage girls in the 1980s and 1990s.
“By mutual agreement, and with immediate effect, Tariq Ramadan, Professor of Contemporary Islamic Studies, has taken a leave of absence from the University of Oxford,” a statement said.
Ramadan's duties will be reassigned and he will not be present on campus, the university said.
Oxford said the claims had caused “heightened and understandable distress” and its principal concern remains “the wellbeing of our students and staff”.
“An agreed leave of absence implies no presumption or acceptance of guilt and allows Professor Ramadan to address the extremely serious allegations made against him, all of which he categorically denies,” it said.
Ramadan, 55, has furiously denied the allegations as a “campaign of lies launched by my adversaries” and is battling them in the courts.
The Swiss national said he welcomed Oxford's statement, which he said “has defended the principle of the presumption of innocence without minimizing the seriousness of the allegations against me”.
Taking a leave of absence will allow him to concentrate on his defence while giving students the space they need, he wrote on Facebook.
Since the rape allegations, Ramadan had continued to teach at Oxford and was seen “walking and laughing in the hall as if nothing had happened,” one student told the local Cherwell newspaper.
The university's Middle East Centre held a meeting last week during which faculty members said they intended for Ramadan to continue in his role, the student-run paper wrote on Friday.
Students were reportedly told they could ask a faculty member to be present at any meetings with Ramadan.
The conservative scholar's brand of Islam has brought both controversy and a significant fan base, with supporters flocking to his defence since the allegations were made public.
The two women who accuse him of rape say they first approached Ramadan to seek the conservative scholar's religious advice.
Muslim feminist activist Henda Ayari told Le Parisien newspaper she “thought I was going to die” as she was attacked in a hotel Paris in 2012.
A second accuser, a disabled woman who has remained anonymous, has alleged Ramadan beat her while raping her multiple times in a hotel in Lyon in 2009.
A legal source told AFP investigators are looking into the women's allegations jointly as part of a preliminary probe for rape, sexual assault, violence and death threats.
Ramadan's lawyers have hit back with charges of witness tampering to demand an investigation into whether the women could have colluded.
French satirical magazine Charlie Hebdo has meanwhile filed a legal complaint after receiving fresh death threats over a cartoon tackling Ramadan and the rape allegations.
The provocative magazine, which suffered a deadly jihadist attack in 2015 after publishing cartoons of the Prophet Mohammed, depicted Ramadan with a huge erection in its edition last Wednesday, saying: “I am the sixth pillar of Islam.”
French Prime Minister Edouard Philippe said those responsible for the death threats should be taken to court.
“As soon as there is a threat of this seriousness is made — whichever media it is made against — I want there to be thorough legal proceedings so that there can be penalties,” he told parliament on Tuesday.