Ruling party politician Mukhriz Mahathir, son of former longtime premier Mahathir Mohamad, resigned as head of Kedah state following an internal party push to oust him, Malaysian media reported.
Mukhriz had been mentioned among potential future contenders for prime minister but his fortunes have flagged due to his outspoken father's ongoing campaign to oust Najib over sensational corruption allegations.
Malaysia has been seized for more than a year by reports that huge sums of money were diverted from a state-owned investment company closely linked to Najib.
Both Najib and the investment company, 1Malaysia Development Berhad (1MDB), strongly deny that the USD 681 million involved 1MDB money.
Also Read
Mukhriz, 51, is the latest top figure in the long-ruling United Malays National Organisation (UMNO) to suffer in the fallout.
After the Najib payment was revealed, he reshuffled his cabinet to sack several members including his deputy prime minister, who had called for transparency, and the attorney-general, who was heading investigations.
A new Najib-appointed attorney-general last week declared the premier clear of any wrongdoing, claiming the payment was a legal "personal donation" from the Saudi royal family.
Authorities in Switzerland, Singapore, the United States and Hong Kong also are looking into money flows related to 1MDB.