Shahrizat Abdul Jalil said on Sunday she would step down as minister for women, family and community on 8 April.
Her family had been accused of misusing the 250m Malaysian ringgit ($83m; £53m) fund to pay for condominiums, vacations and a Mercedes.
The “cowgate” scandal led to talk that Prime Minister Najib Razak might delay upcoming elections.
The minister said her resignation was not related to the cattle project run by her husband and three children. She was said she was stepping down as a “responsible member of the government” after her term as senator ends next month.
She added that she would, however, continue to serve as chief of the women’s wing of the ruling party, the United Malays National Organisation (UMNO) and governing coalition Barisan Nasional (BN).
Her decision came after months of pressure from the public and opposition over the allegations.
Her senatorship was widely expected to be extended before the scandal broke last year.
‘A sacrifice’
An annual report by the auditor-general said that the National Feedlot Centre run by the minister’s family had not met its target of 40% self-sufficiency in beef production by 2010.
Allegations then emerged that the soft government loans were being misused for personal means, including the purchase of luxury apartments in Malaysia and neighbouring Singapore.
The minister has denied any wrongdoing, and company officials have reportedly said that the property investments could generate income.
Police in the South East Asian country are investigating the allegations.