Arthur Wagner stepped down from his post in the eastern Brandenburg state but remains a member of the party.
AfD claims Islam is incompatible with the German constitution and wants a ban on minarets and the face-covering burqa.
It became the third-largest party in the country’s parliament after the general election last September.
The party said it stood for the constitutional right of religious freedom, regardless of Mr Wagner’s conversion.
“Mr Wagner could also choose another religion,” Daniel Friese, a spokesman of the party, told Berliner Zeitung, noting that Mr Wagner had resigned from the board two weeks ago.
“Mr Wagner resigned on 11 January from the state board on his own volition.
“Only afterwards was it known that he had converted to Islam,” Mr Friese added.
Mr Wagner declined to comment on his conversion. “He does not want to speak with the press. He believes it is a private affair,” the party spokesman said.
German daily Tagesspiegel reported on Wednesday that Mr Wagner, who joined AfD shortly after it was founded in 2013, has previously been active in a group assisting refugees.
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