Beverly Whaling had appeared to applaud a Facebook post referring to Mrs Obama as an “ape in heels”.
She wrote that the post had made her day, but later said she was referring to the election outcome.
A petition calling for the mayor’s resignation had gathered over 170,000 signatures.
Ms Whaling was the mayor of the town of Clay, which has a population of just 491.
The town has no African American residents, according to the 2010 census. In Clay County as a whole, more than 98% of its 9,000 residents are white.
Ms Whaling had responded to a Facebook post by Pamela Ramsey Taylor, a local resident who runs a non-profit group in Clay County, which referred to the first lady as an “ape”.
“It will be refreshing to have a classy, beautiful, dignified first lady in the White House. I’m tired of seeing a Ape in heels,” Ms Taylor wrote.
Ms Whaling responded with “just made my day Pam”.
While Clay County has a small population, the furore over the Facebook post spread far and wide.
Ms Taylor had already been dismissed from her post.
Ms Whaling had already issued a written apology to news media outlets saying that her comment wasn’t intended to be racist.
“I was referring to my day being made for change in the White House! I am truly sorry for any hard feeling this may have caused! Those who know me know that I’m not in any way racist!”