Hawthorn board member Bruce Stevenson,who was on the selection committee that appointed Gaudry,has also stepped down from the board after four years.
"Unfortunately Tracey has faced extenuating family and personal circumstances ths year which have made it difficult to continue in the role,"Garvey said in a statement.
"On behalf of all at Hawthorn I want to thank Tracey for her considerable contribution to our club in the relatively short time she has been our CEO. We understand and respect her decision to stand down.
"Tracey has been incredibly selfless and professional throughout this process and the club wishes her and her family all the best in their future endeavours."
It is understood Gaudry met with Garvey on Sunday night where her position was discussed after the club had received negative feedback from senior industry figures as well as Hawthorn officials and football staff. It is understood other senior managers had been poised to quit the club prior to Sunday's decision.
The Hawks chairman is understood to have reached the decision to remove Gaudry early in grand final week but the club chose to wait until after the weekend to make the controversial move.
Gaudry's departure is a blow to the authority of Garvey who was Gaudry's strongest backer when she was appointed.