University of California President Janet Napolitano said Wednesday that she is placing UC Davis Chancellor Linda Katehi on paid leave during an investigation into whether she violated UC policies.

Students and lawmakers had demanded Katehi’s resignation, outraged over her involvement with a for-profit education corporation and the school’s questionable use of consultants to clean up its online reputation.

Napolitano released a statement Wednesday that said Katehi would be placed on “investigatory administrative leave” while an outside investigator looks into the allegations. The investigator will submit a report before the start of the 2016-17 academic year.

The probe will look into the campus’ employment and compensation of some of the chancellor’s family members, her involvement in contracts related to managing the campus’ and her personal reputation on social media, and the possible misuse of student fees, Napolitano said. UC Davis Provost Ralph Hexter will serve as acting chancellor.

“I am deeply disappointed to take this action,” Napolitano said in a statement. “But Davis is a strong campus, nationally and internationally renowned in many academic disciplines. I’m confident of the campus’s continued ability to thrive and serve California students and the Davis community.”

Katehi joined the board of the for-profit DeVry Education Group in February, a position that paid $70,000, in violation of UC’s policy requiring approval for such positions. Napolitano said she would not have approved the position. Katehi later resigned.

This month, the Sacramento Bee revealed that UC Davis had paid reputation managers at least $175,000 to remove negative Internet references to the widely criticized pepper-spraying of peaceful student protesters by campus police in 2011.

Nanette Asimov and Jenna Lyons are San Francisco Chronicle staff writers. Email: nasimov@sfchronicle.com, jlyons@sfchronicle.com Twitter: @NanetteAsimov, @JennaJourno