By Suzannah Gonzales

CHICAGO (Reuters) - Chicago Public Schools Chief Executive Officer Barbara Byrd-Bennett has resigned amid a federal probe into a contract the district awarded to her previous employer, the mayor's office said on Monday.

"I am saddened by the circumstances that have led to Barbara's resignation and I wish her well," Chicago Mayor Rahm Emanuel said in a statement.

Byrd-Bennett took a leave of absence in April. Her contract had been set to expire on June 30.

"As a city, our focus must remain on finishing the school year strong and tackling the billion-dollar budget deficit that threatens the progress our students, teachers, principals and parents have made over the last several years," Emanuel said.

Federal authorities are investigating a $20.5 million no-bid contract the district awarded to SUPES Academy, a training facility for principals that had employed Byrd-Bennett.

Emanuel appointed Byrd-Bennett to head the nation's third-largest public school system in 2012. The financially troubled system, which serves 400,000 students, faces a prospective $1.1 billion deficit.

The Chicago Teachers Union, currently in contract negotiations with the district, said the investigation that forced Byrd-Bennett's departure "sets a horrible example for our students and the educators who look to her leadership."

The union said Byrd-Bennett leaves under a "cloud of suspicion and organizational chaos," and it called for an elected school board.

(Reporting by Suzannah Gonzales; Additional reporting by Mary Wisniewski; Editing by Lisa Lambert)