Albany superintendent Marguerite Vanden Wyngaard took action after the teacher instructed pupils to practice their persuasive writing techniques by arguing 'Jews are evil'.
Ms Wyngaard apologised to parents during a news conference and said the assignment 'displayed a level of insensitivity that we absolutely will not tolerate'.
The suspended teacher had told her English class to pretend to be Jew-hating Nazis by writing a letter to a Nazi government official to try and convince him 'Jews are evil and the source of our problems'.
Ms Wyngaard told the news conference that she didn't think the assignment had been set with malicious intent but did display 'a level of insensitivity'.
The Guardian reported that many students were 'dismayed' by the assignment, with some refusing to complete it.