Real Madrid have announced an agreement to sign highly-rated teenage defender Jesus Vallejo from Real Zaragoza.
Aston Villa have continued their spending spree after securing the services of Rudy Gestede from Blackburn on a five-year contract.
The Magpies launched an investigation into an incident after the under-21 team's 2-0 defeat at Sunderland on Monday evening.
It was claimed the former Scotland international was involved in an altercation with 19-year-old defender Remie Streete.
A club statement confirming Donachie's resignation made no mention of any such incident and gave no reason for the 62-year-old's decision to leave his post. It said the club would be making no further comment.
Newcastle's loss in the second-string derby came two days after the senior team were beaten 3-0 at home in the Barclays Premier League by the Black Cats.
Donachie's resignation completes a turbulent week at St James' Park.
The Magpies sold their best player, Yohan Cabaye, without replacing him, before that match and earlier this week announced the departure of controversial director of football Joe Kinnear.
Alan Pardew's side are away to Chelsea on Saturday.