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EVERETT — In a sharp reversal, Gloucester Mayor Sefatia Romeo Theken on Thursday rescinded her decision to fire embattled Police Chief Leonard Campanello, and instead will allow him to retire in January.

The decision came three days after Romeo Theken announced she was firing Campanello amid accusations that he destroyed evidence tied to a city investigation into his personal relationships with two women.

Campanello, a high-profile chief hailed nationally for his approach to treating heroin addiction, will be on paid administrative leave until Jan. 3, 2017, when he will officially retire from his $127,890-per-year position.

"This agreement ensures that any potential hearings, expenditure of attorney fees, or negotiations are over, with no other court actions available for the future," Romeo Theken said in a statement.

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She added that she hopes the agreement, reached after negotiations with Campanello's lawyer, will help Gloucester move forward "from this unfortunate situation." Romeo Theken first placed Campanello on paid leave on Sept. 13.

Deputy Police Chief John McCarthy will continue to lead the department on an a temporary basis, Romeo Theken said.

The agreement was announced shortly before Campanello spoke at a news conference at his lawyer's office in Everett.

"This has been an extraordinarily difficult time for myself and my family," Campanello, 48, said, reading from prepared remarks. "I'm pleased that the city of Gloucester and Mayor Theken have agreed to a resolution to this matter."

His lawyer, Terrence W. Kennedy, characterized the situation as a "contractual matter that was resolved between the chief and the City of Gloucester."

Kennedy had previously described the investigation as a "witch hunt" and said the termination announced Monday had violated the chief's contract.

Authorities have not gone into detail about the nature of Campanello's relationships, but an investigator said the women "may have been in fear for their safety.''

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Leonard Kesten, the special counsel hired by the city, has said Campanello was fired over the alleged destruction of evidence, not his alleged involvement with the women.

On Thursday, Kesten said in a telephone interview that the decision is unlikely to affect Campanello's pension, because he has not been accused or convicted of any criminal allegations.

Campanello, who served as a police officer and detective in Saugus for 23 years, has led the Gloucester department since 2012, when he was appointed by then-Mayor Carolyn Kirk, now a Baker administration official.

His profile rose quickly after he started the Angel Initiative to help people struggling with drug addiction instead of arresting them. In April, Campanello was honored by the White House as a "Champion of Change" for his efforts.

Gloucester plans to continue the Angel Program, Romeo Theken said.

"We are grateful that there are so many successful stories of recovery, perseverance and triumph provided by past and current city leaders, especially within public safety," she said. "I know our brightest days are on the horizon."

While the city's probe has ended, the Essex district attorney's office is "reviewing materials that the City of Gloucester turned over," spokeswoman Carrie Kimball Monahan said.

There was no further information available about the course that process could take, Kimball Monahan said.

Campanello allegedly lied to investigators, deleted 653 text messages exchanged with one woman in a single day, and made up a story suggesting that his city-owned cellphone had been stolen from his office.

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Kesten said Thursday that the city initially believed it had to give Campanello only one month notice under the contract, which was signed under the Kirk administration.

During negotiations this week, Gloucester officials came to the conclusion that Campanello was entitled to three months' notice, and had several mechanisms to challenge his firing. A protracted legal battle would not have been worth it, Kesten said.


Travis Andersen and Steve Annear of the Globe Staff contributed to this story. Andy Rosen can be reached at andrew.rosen@globe.com Steve Annear can be reached at steve.annear@globe.com.