In a statement the council said: "Ian McDonald has retired from his post as deputy director of education with Glasgow City Council on the grounds of ill-health. It would be inappropriate to comment further."
Mr McDonald has been on sick leave since the end of 2001. He and two colleagues were at the centre of allegations surrounding the circumstances in which work worth pound;90,000 was awarded to a company run by his son.
The council launched an investigation headed by Ken Corsar, Glasgow's former director of education. The inquiry focused on tendering procedures within the education department and the council says these have now been tightened up.