The medical board had prepared a strong case against her, people familiar with the case said, and it would have introduced evidence questioning her therapy methods and suggesting that she had become sexually involved with her patient, Paul Lozano, a Harvard Medical School student. Mr. Lozano, who began therapy with Dr. Bean-Bayog in 1986, killed himself with a large overdose of cocaine in April 1991 after she had stopped treating him.

Mr. Lozano's family has filed a lawsuit against Dr. Bean-Bayog charging her with malpractice and wrongful death. Andrew Meyer, the Lozano family's lawyer, said that Dr. Bean-Bayog's resignation would tend to help the family's case. Allegations Attract Notoriety

The case has attracted enormous national attention because of the sexual allegations and because of 3,000 pages of medical records introduced by Mr. Meyer that include sexual fantasies written by Dr. Bean-Bayog. At least two books and two television movies are in the works, and some of the hearing was to have been televised on Court TV. Officials of the state Division of Administrative Law Appeals, an independent state agency that is conducting the hearing, said they had received so many requests for press credentials that they had decided to move the proceeding to the State House auditorium, with a seating capacity of 600.

Dr. Bean-Bayog and some of her friends in the psychiatric community have said she is being unfairly singled out because she is a woman. They have argued that neither the press nor the medical board would have pursued the case so vigorously if she were a man.

Another psychiatrist, Dr. William Barry Gault, who also treated Mr. Lozano, first reported possible abuse by Dr. Bean-Bayog in late 1990. But it was not until last March, after Mr. Meyer filed 3,000 pages of evidence with the court and after the press subsequently began reporting about the case, that the medical board began its inquiry. Sexual Fantasies Documented

Mr. Meyer's evidence included sadomasochistic sexual fantasies handwritten by Dr. Bean-Bayog, allegedly about Mr. Lozano, and flashcards she gave him.

One of the cards said: "Run over these cards every day until you know them all by heart and are starting to believe them." Another said, "I'm your mom and I love you and you love me very, very much. Say that 10 times." Still another said, "I'm going to miss so many things about you, the closeness and the need and the phenomenal sex."