Professor Andrew Atherton took up the role just ten months ago.
He picked up a £40,000 “disruption allowance” to help him move to Dundee from Lancaster University to take up the job of principal and vice-chancellor on 1 January.
But it has now emerged he was suspended in September for allegedly failing to pay rent on accommodation provided to him by the university.
It is understood Prof Atherton, 53, had been staying at University House on Perth Road, but had refused to pay the full amount of rent due on the property.
An independent inquiry is under way.
It is not known if he will return as principal or if the university will be able to reclaim any of the allowance paid to help him complete the 230-mile move from Lancaster to Dundee.
Prof Atherton was named as the successor to Professor Sir Pete Downes in July last year.
He was appointed with a remuneration package worth £298,000 – a base salary of £250,000 plus £48,000 in pension contributions.
The first £8,000 of the £40,000 paid to help him relocate was tax free, in line with HMRC rules.
The university’s standard relocation package is one month’s gross salary, but more can be paid in exceptional circumstances.
Dundee gained university status in 1967 and Prof Atherton is only its seventh principal since then.
His predecessor, Prof Sir Pete Downes, held the role for nine years before retiring at the end of last year.
Prof Atherton was formerly deputy vice-chancellor and professor of enterprise at Lancaster University.
Before joining Lancaster in 2013, Prof Atherton was senior deputy vice chancellor at Lincoln University.
Before that, he worked at Durham University.
A spokesman for Dundee University confirmed the suspension yesterday.
He said: “Professor Atherton, principal and vice-chancellor, was suspended from office on September 13, pending an investigation which remains to be completed. That process includes an investigation carried out by someone external to the university.
“As is our policy in any disciplinary case, it would not be appropriate for the university to comment further while the process is ongoing.”
Prof Atherton was approached for comment.