"There is nothing more important than the work of the government in fighting the coronavirus crisis," Mr Harwin said in a statement on Friday evening.
"I will not allow my circumstances to be a distraction from that work and I very much regret that my residential arrangements have become an issue during this time."
Mr Harwin said he'd sought at all times to act in accordance with public health orders and "remains confident" he had done so.
But, he acknowledged, "perception is just as important during these times".
Premier Gladys Berejiklian said in a statement that Mr Harwin had "appropriately resigned from cabinet".
"The police, who have been tasked by my government with enforcing these health orders, came to the conclusion that Minister Harwin breached the order," she said on Friday evening.
"While Minister Harwin has served the people of NSW well, and he continues to assure me that he did not break the rules, the orders in place apply equally to everybody."
The minister earlier this week said he'd been mostly living on the Central Coast for four months for health reasons.
"I live in a very built-up area in Sydney with high density and here I have windows that can open so I can have the fresh air and I can walk in fresh air and I have more room in my house here than I would have in my small apartment," he told the Daily Telegraph in Pearl Beach.
The NSW Police commissioner has previously said people should be in lockdown at their primary residence to prevent regional hospitals from potentially becoming overwhelmed with sick city-dwellers.
Officials across the world have been caught flouting self-isolation rules and reprimanded, including Scotland's chief medical officer Catherine Calderwood and New Zealand Health Minister David Clark.
People in Australia must stay at least 1.5 metres away from others and gatherings are limited to two people unless you are with your family or household.
If you believe you may have contracted the virus, call your doctor (don’t visit) or contact the national Coronavirus Health Information Hotline on 1800 020 080. If you are struggling to breathe or experiencing a medical emergency, call 000.
SBS is committed to informing Australia’s diverse communities about the latest COVID-19 developments. News and information is available in 63 languages at sbs.com.au/coronavirus