Adrian McQuillan claimed he was targeted in a "four-year witch hunt" by people including senior elected members of the party.
The Causeway Coast and Glens Borough councillor was suspended by the DUP in September 2022 for 12 months.
A DUP spokesperson said a disciplinary panel found Mr McQuillan's conduct had brought the party into disrepute.
It said he published material online which "directly attacked, smeared and without foundation, called into question a number of DUP colleagues".
Mr McQuillan said the allegations, including claims of bullying and harassment, were false.
He appealed the disciplinary action but was told on Monday that the party was upholding his suspension.
In a statement, the councillor said he was disappointed to announce his resignation.
"It is clear to me that there has been an orchestrated plan to remove me prior to the selection process for the upcoming local government election in May," he said.
He added that his resignation was "driven by elements of the party with personal grudges".
"Sadly the DUP is no longer the party that I joined, and despite me still having many good friends in it, the hierarchy has lost its way and it appears no longer wants to be associated with grassroot unionism or anyone with an opinion which differs from them," he added.
Mr McQuillan sat in the Northern Ireland Assembly until 2017, when he lost his seat.
He was previously suspended by the DUP for six months in 2019.
The DUP said Mr McQuillan "was only readmitted to party membership on the basis that he would uphold the rules and constitution of the party and work in a collective manner with his party colleagues".
"It is deeply regrettable that cllr McQuillan, whilst a member of the party, engaged in such behaviour which led to his second period of suspension.
"It was his actions and attitudes alone that directly led to his further suspension from the party."
Mr McQuillan says he will continue in his role as an independent councillor.