The FA charge relates to eight bets placed on football matches between 30 November 2013 and 12 July 2019.
The club decided to suspend Downes with immediate effect allowing the club and the board of the Dons Trust to investigate the matter fully.
The club confirmed the statement announcing Downes’ departure.
Downes had been Wimbledon manager since December when he replaced Neil Ardley and managed to keep the south-west-London side in League One.
The retired midfielder played for Wimbledon 200 times in an 11-year spell between 1977 and 1988.
Assistant manager Glyn Hodges will take control of the first team for Saturday’s fixture against Peterborough United.
The Dons are 22nd in League One and are yet to have won a league match this season.
BY DAN ALEXANDER/ PA IMAGES