Coe said "the current noise level" around his 38-year tie with the sportswear firm was distracting to his mission of cleaning up athletics.
A Nike spokesman told Marketing: "Sebastian Coe has informed us that he will no longer be able to play a role as an ambassador for Nike.
"Seb has been a Nike athlete since the 1970s and we are obviously disappointed, but respect his decision."
Coe was this week accused of successfully lobbying his predecessor, Lamine Diack, to award the hosting rights to the 2021 World Athletics Championships at Eugene, Oregon, where Nike started out. Eugene was chosen as host city without a bidding process, according to a BBC investigation, with the Swedish city of Gothenberg losing out.
Coe has said he was unaware that Eugene would be handed hosting rights outright, without the usual bidding process.
Diack is separately under investigation for alleged corruption in relation to state-sponsored doping in Russia.
Discussing his decision with the BBC, Coe said he hadn't bowed to media pressure to drop his Nike role.
Following talks with his fellow IAAF Council members, Coe said: "It is clear that perception and reality have become horribly mangled.
"I have stepped down from the Nike position I have held for 38 years."