The decision was met with cheers and boos during the district's board of trustees meeting Thursday night.
Hindt read his resignation statement in a shaky voice, saying the bullying accusations were a smear campaign filled with ruthless attacks.
He also said that the whole thing has severely hurt his family.
"I love Katy, but there is a vicious ugliness in the ruthless attacks that I and others have endured," said Hindt, reading from a prepared statement. "With this smear campaign against me, I cannot fulfill my duties as superintendent."
WATCH: Superintendent Lance Hindt's full resignation speech
The allegations first came to light in March when a man named Greg Gay came forward during a school board meeting and accused Hindt of bullying him in junior high.
Gay told ABC13 he never wanted Hindt to step down. He just wanted an apology.
"I would have liked him to have at the very least said, 'I don't remember you, if I did this I'm sorry. Let's move forward from here and try to work together to fix the problem,'" Gay said.
Gay also said that he never wanted Hindt's family to be attacked as a result of the allegations.
"I had no idea he was getting attacked at home. I knew nothing of that. For people to go after his family, that just horrifies me. They're being what he was to me. That's what we want to fix," Gay added.
The reaction to Hindt's resignation has been mixed with some saying they're sad to see him go.
"A lot of teachers think he's the greatest person we've had. So, it makes me sad that we're losing him. It really does," said school district mentor Denny Gideon.
Others said during the meeting that they believe he made the right choice.
"I think it was the right thing to do. I'm glad he resigned. I think it's sad that it came to this because if Dr. Hindt had stood up on the first day and basically said 'Greg, I'm really sorry.' Even if he didn't remember the incident, he knows how he was and if he had just said 'Greg, I'm sorry,' then he would've been more of a hero and that didn't happen," said Debby Roseman, who supports the resignation.
Despite Hindt stepping down, the school board voted to move forward with hiring attorneys to pursue a defamation lawsuit on his behalf.
The school district will hire the law office of Feldman & Feldman to head up a defamation suit.
The board also approved changing his contract.
On Friday, the document was released to Eyewitness News showing Hindt would receive $750,000 after he leaves.
"Would you expect that at a job that you had if you just left? They didn't fire him. He resigned and there's a difference," former Katy ISD trustee Mary McGarr said.
McGarr is no stranger to how a school board operates. She served as as Katy ISD trustee in the 90s.
"I was called 6-1 Mary while I was on the board," McGarr said.
She hopes the current board will learn from hers, and their own mistakes, and hire a candidate that will move Katy ISD forward.
"They do need to do some healing, instead of suing," McGarr said.
Hindt's resignation will be effective on Jan. 1, 2019.
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