It was previously reported he planned to step down as dean at the end of the year, to take up a new professorship at the University of Auckland Law School.
Prof Henaghan, in his statement this morning, said he now felt it was "appropriate to allow a fair and decent amount of time for my successor Professor Jessica Palmer to learn the ropes in this very demanding role and to enable her to lead the strategic planning for next year and into the future''.
His final day as dean was today, but he would remain at the university to support Prof Palmer, and continue his research and lecturing roles, until the end of the year.
"I am very confident Professor Palmer will do a brilliant job as dean of the wonderful Otago Law Faculty. She has all the necessary qualities to lead the faculty into a very bright future. I wish her all the best in this new role.
"I will not be making any further media comment at this time.''
Henaghan's decision to depart came after complaints about some second-year law camps organised by the Society of Otago University Law Students (Souls) at Camp Iona, near Herbert, emerged last month.
Some students said they felt uncomfortable at the camps, amid reports of excessive drinking, stripping and jelly wrestling.
Prof Henaghan was said to have been present as a guest at times.
A former student had told the Herald that Henaghan was there when students stripped in a talent quest skit at a law camp.
The woman, who has since finished her studies, said four girls removed clothing until they were only wearing their underwear with "stars over their nipples" at the 2014 camp.
"They had underwear on their bottom half and the last girl in the line was completely topless," the woman said.
Arriving at the camp, which was organised and run by student society, and unsure of what to expect, the woman was told it was a tradition for girls to strip, and for the dean to be present.
"We were all informally told that by the older students," she claimed.
Henaghan was the only staff member from the faculty present at the camp, according to the woman.
Souls later cancelled this year's camp, saying the university was not prepared to support it.
Humanities pro-vice chancellor Professor Tony Ballantyne said at the time two complaints had been received last year.
All concerns about the camps were taken seriously and were being examined by the university, he said.
