Beverly Whaling had appeared to applaud a Facebook post referring to Mrs Obama as an "ape in heels".
She wrote that the post had made her day, but later said she was referring to the election outcome.
A petition calling for the mayor's resignation had gathered over 170,000 signatures.
Ms Whaling was the mayor of the town of Clay, which has a population of just 491.
The town has no African American residents, according to the 2010 census. In Clay County as a whole, more than 98% of its 9,000 residents are white.