LSU Chancellor F. King Alexander and athletic director Joe Alleva said in a joint statement Friday that the school has suspended Wade "until such time as we can ensure full compliance with the NCAA, as well as institutional policies and standards."
They have appointed assistant Tony Benford as interim head coach.
Yahoo! Sports reported Thursday that Wade was recorded by the FBI discussing with middleman Christian Dawkins about a "hell of an offer" for a then-recruit believed to be LSU freshman guard Javonte Smart.
"Recent media reports regarding coach Will Wade are without question concerning to all of us," Alexander and Alleva's joint statement said. "As such, we and university officials have taken deliberate and purposeful steps to fairly assess and adequately address this situation. ... We are closely coordinating with the NCAA with every step. They have our full cooperation and we will continue to report to them all facts and information on this matter."
The middleman Dawkins is one of several people convicted in October of conspiracy to commit wire fraud for funneling illegal payments to families of recruits to Louisville, Kansas and North Carolina State.
In the Yahoo! report, Wade is described expressing his frustration with an unidentified third party handling the recruitment of player referred to only as "Smart."
Wade is quoted on a transcript of the call saying that he made a strong offer that was "tilted toward taking care of" the player and his mother, but that the third party who received the offer was unsatisfied with his "piece of the pie."
The report also stated that it was not clear if the offer Wade discusses would violate NCAA rules, or if the player and his family knew of, or accepted, the offer, of which there were no specific details.
"I cannot comment at this time on various media reports, except to say that they do not begin to tell the full story," Wade wrote in a statement to the New Orleans Times-Picayune. "I understand the University had to take action before all the facts are in, but I would ask everyone to withhold their judgment until the record is complete."
LSU's 25 regular season victories are tied second most in program history with the 2000 and 2009 teams and behind only the 1981 Final Four team that won a school-record 27 regular-season games. The 1981 team went on to finish the postseason with an LSU-record 31 victories.
The Associated Press contributed to this report.