Father Mark Morris reportedly organised a rosary of "reparation for the gross offence to God which is Pride Glasgow" at the Immaculate Heart of Mary Catholic Church in Balornock.
A website notice for the event on Sunday has since been deleted but he will no longer serve as chaplain at Glasgow Caledonian University (GCU).
First Minister Nicola Sturgeon led Glasgow Pride on Saturday as honorary grand marshal of the event in recognition of her long-standing support for lesbian, gay, bisexual, transgender and intersex (LGBTI) equality.
She described leading thousands of marchers at Scotland's largest LGBTI pride event as a "real honour".
GCU initially said it was "extremely disappointed" to hear of the service and would look into the matter.
It has now been decided he will not return to the chaplaincy role when students return to the university later this year.
Yesterday the University expressed "extreme disappointment" on learning our Catholic chaplain Father Mark Morris had held a service at his parish church to atone for the "gross offence" of Pride Glasgow. Today University Principal, Prof Pamela Gillies CBE FRSE, said pic.twitter.com/4jpvMM5B1G
— Glasgow Caledonian University (@CaledonianNews) July 18, 2018
University principal, professor Pamela Gillies, said: "Following due consultation Father Mark Morris will not return to his chaplaincy role at the university in September.
"The university will work with the Archdiocese of Glasgow to ensure the continued provision of chaplaincy support for staff and students at our Faith and Belief Centre when the new term starts.
"The University is strongly inclusive and committed to supporting equality and diversity on campus."
A spokesman for the Archdiocese of Glasgow said: "The Archdiocese is aware of the University's decision and will address the provision of chaplaincy support in due course."
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