Peacekeepers from the Philippines and India were wounded by mortar shrapnel as the two sides fought for the strategic crossing, according to diplomats.
UN leaders held emergency talks to replace the 377 Austrian troops who make up more than a third of the United Nations Disengagement Observer Force (UNDOF), which has monitored a ceasefire between Israel and Syria since 1974.
Austrian Foreign Minister Michael Spindelegger called UN chief Ban Ki-moon to tell him of the withdrawal, said UN spokesman Martin Nesirky.
Austria has been the cornerstone of UNDOF for many years. Nesirky said the UN was in talks with Vienna about the timing and other details of the withdrawal.
More From This Section
The country's defense minister, Gerald Klug, said the withdrawal would take between two and four weeks and could start as soon as Tuesday.
UNDOF has played a key role in monitoring the peace between Damascus and Israel over the past four decades and there are growing fears that Israel could be drawn into the Syria war.
Fiji has promised some replacement troops but these have not yet arrived.
The UN Security Council is to hold talks on the UNDOF crisis on Friday. It is due to renew the mandate of the force this month, but major changes may now be needed, diplomats said.
Austria acted as tensions from the Syrian war reached a new peak in the Golan, with rebels taking over the Quneitra crossing between Israel and Syria, which is normally controlled by UNDOF.
There was "intense fighting," said UN peacekeeping spokeswoman Josephine Guerrero.
Two peacekeepers "sustained minor injuries after mortar rounds impacted Camp Ziouani. Both peacekeepers are reported to be in stable condition," Guerrero added.