Jonah Lehrer, 31, acknowledged in a statement from his book publisher that some quotes he used did "not exist", and others were misquoted.
The resignation came after the online magazine Tablet wrote an in-depth piece on the quotations used in Imagine: How Creativity Works.
Shipments of the book, which was published in March, have been halted.
The e-book version has been unlisted. Houghton Mifflin, the publisher, said Lehrer had committed a "serious misuse".
Lehrer was already out of favour at the New Yorker, which is known for its thorough fact checking, after he admitted last month having recycled passages for the magazine that he had written for previous publications.
His admission came after Michael Moynihan of the Tablet contacted him about the quotes.
"I told Mr Moynihan that [the quotes] were from archival interview footage provided to me by Dylan's representatives," he said. "This was a lie spoken in a moment of panic.
"The lies are over now. I understand the gravity of my position. I want to apologize to everyone I have let down, especially my editors and readers."
Among the quotes that were called into question was one that first appeared in the 1960s documentary Don't Look Back. When asked about his songs, Dylan says "I just write them. There's no great message."
In his book, Lehrer added a third sentence - "Stop asking me to explain" - that does not appear in the film.
Imagine: How Creativity Works was published in March and had been selling well, ranking No 105 on Amazon.com as of Monday.
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