The company said its Supervisory Board, akin to a board of directors for US -based companies, has hired the accounting firm PWC to conduct an independent investigation of its finances.
Chairman Christo Wiese will take the role of executive chairman on a temporary basis, while Pieter Erasmus - formerly chief executive of Pepkor Group, one of Steinhoff's African subsidiaries - will help Wiese in an advisory capacity.
The company has also postponed its full year results as it calls in accountants from PwC to launch an independent probe into the accounting irregularities.
Shares in Steinhoff International fell by about 60 per cent after the news was announced.
It put Christo Wiese, its largest shareholder and chairman, in charge and later sought to give "additional comfort" to investors anxious about its ability to fund its existing operations, saying it had identified measures that would give it around 2 billion euros ($2.4 billion) of additional liquidity.
The state prosecutor in Oldenburg, Germany has been investigating suspected accounting irregularities since 2015, looking into whether revenues were booked properly, and taxable profit was correctly declared.
Markus Jooste resigned on Tuesday with immediate effect.
Jooste, who had been with Steinhoff since 1988, has previously been credited with growing the Steinhoff Holding's into Europe's second-largest player, through a series of acquisitions of home retail furniture chains.
Steinhoff shares traded 64% lower at €1.08 as of 16:02 in Frankfurt.
The group on Tuesday said that its results for the year to end-September would be released "when it is in a position to do so". "In addition, the Company will determine whether any prior years" financial statements will need to be restated'.
The FT approached Deloitte - which was appointed the company's external auditor in 2015 and audited its accounts in 2015 and 2016, according to Steinhoff's annual reports. Deloitte declined to comment due to client confidentially obligations and the ongoing investigations.