Headmaster Pramod Kumar Swain of the English-medium school at BB Guda under Malkangiri police station was suspended after an inquiry into the complaint by the girl's parents, Sub-collector, Malkangiri, Nruparaj Sahu said.
The district inspector of schools suspended Swain yesterday after the inquiry, he said.
Swain, who was awarded the President's Medal a few years ago for being an outstanding teacher, had called the standard four student to his room and allegedly molested her, Sahu said.
The parents did not inform the police, but took up the matter with him, Sahu said.
"Swain was absent from the school for the last two days. I have conducted an inquiry. I spoke to the students, teachers, parents and villagers," Sahu said.
The incident came close on the heels of a sub-inspector of schools being arrested and sent to jail on the charge of molesting a teacher who was later burnt to death in Rayagada district.