“I've been working desperately hard to find a way forward with the directors, but sadly that has not proved possible,” the English manager said in a statement.
“It's my opinion that a manager must have the right to manage and that clubs should not impose upon any manager any player that he does not want.
“It remains my fervent wish to see Newcastle United do well in the future and I feel incredibly sorry for the players, staff and most importantly the supporters.”
The 57-year-old handed in his resignation after just eight months in charge of the Magpies.
Keegan was apparently frustrated by the board’s failure to back him in the summer transfer window.
The sale of winger James Milner to Aston Villa also infuriated the former England manager.
“I have been left with no choice other than to leave,” he added.
Under Keegan, Newcastle won just six matches out of possible 21 competitive games.