Mr O'Keeffe, 54, has resigned on mutually acceptable terms after less than a year in charge of the 14,000-student college.
He was recruited last March to turn round the college, which was pound;2 million in debt.
Mr O'Keeffe was controversially sacked in November, and then reinstated on home leave in January on the understanding that an inquiry would be held into his sacking.
But a special inquiry was never set up and Mr O'Keeffe's solicitor negotiated the end of his contract with the college's legal representatives.
His departure was announced during a week in which the college was facing a rigorous inspection by the Office for Standards in Education.
Mr O'Keeffe has received a pay settlement from Salisbury as part of the mutual agreement and says he now hopes to secure another post.
A jointly agreed statement said: "The board has accepted Mr O'Keeffe's resignation on mutually acceptable terms and understand that he wishes to deploy his extensive skills and experience elsewhere.
"In reaching this agreement, both Mr O'Keeffe and the board are aware of the need to give primacy to the needs of staff and students at this sensitive time and the need to avoid a long period of uncertainty."
Ray Dowd, principal of Wirral Metropolitan college, has been appointed as interim manager until a permanent appointment can be made.