Friday's decision comes one day after authorities charged Zisa and his former girlfriend, Kathleen Tiernan, with insurance fraud.
Hackensack's city manager says Zisa remains on the payroll and his status has not yet been determined.
Zisa surrendered to the Bergen County prosecutor late Thursday in what may prove to be a dramatic fall from grace.
The indictment against Zisa was unsealed Friday.
Zisa, along with his former live-in girlfriend Kathleen Tiernan, 49, are now charged with insurance fraud.
The 56-year-old has been with the Hackensack Police Department for 34 years, the last 15 as chief.
The charges stem from an incident in February of 2008, when Tiernan drove Zisa's Chevy Trailblazer into a utility pole on Moore Street in Hackensack at 12:45 a.m.
According to the prosecutor's office, Zisa ordered the officers at the scene to write in their report that his girlfriend had swerved to avoid an animal, and that's how she hit the pole.
But the officers reportedly told Zisa they had smelled alcohol on the woman's breath and that she had said nothing about swerving to avoid an animal.
Tiernan was not given a Breathalyzer test after the accident.
An insurance claim was then filed for damages in the crash, and that lead to the insurance fraud charges.
Zisa's family members have served, at various times, as mayor and deputy mayor, deputy police chief and on the City Council.
This past year has been a tumultuous one for the Hackensack Police Department, with Zisa named in five separate civil lawsuits filed by 15 current and former police officers. The officers alleged that Zisa, who also served as a Democratic state assemblyman for the 37th District from 1994 until 2002, abused his authority by retaliating against officers who did not contribute to his state election campaigns or those of candidates he supports in county, city and local police union elections.
Zisa has denied those allegations, which did not involve any criminal complaints, saying the lawsuits were filed by disgruntled employees who are looking for a financial windfall from the city.
Capt. Tomas Padilla will be the acting officer in charge.
"I think it's important to lead the men and women. We have a great department," he said.