"Following the involvement of certain members of the judiciary in questionable activities … and numerous complaints that we have received of corruption, irregularities and gross inefficiencies in the judicial system, the chief judge has been sent on leave on full pay until further notice," he said.
"A full, proper and unrestricted inquiry into the judiciary" would be conducted, he said.
The move is the latest in a series of high-level replacements since the military overthrew the democratically elected government in a bloodless coup on December 5.
Bainimarama said John Connors and Anthony Gates, both high court judges, would be handling Fatiaki's caseload while he was on leave.
Wednesday's suspension is part of a continuing shake-up of senior positions after Bainimarama disbanded the cabinet and banished Laisenia Qarase, the prime minister, from Suva.