Wallin's travel expenses, which total more than $321,000 since September 2010, have been the subject of an external audit by Deloitte since December.
"I have been co-operating fully and willingly with the auditors," Wallin, a former CTV broadcaster, said in a brief written statement Friday evening.
"I have met with the auditors, answered all the questions and provided all requested documentation. I had anticipated that the audit process would be complete by now but, given that it continues, I have decided to recuse myself from the Conservative caucus."
A source tells The Canadian Press that Wallin was told by Prime Minister Stephen Harper that she could not stay in caucus. Wallin said she'll have no further comment until the audit is complete.
Her decision comes one day after fellow former broadcaster Sen. Mike Duffy stepped down from the Tory caucus amid controversy about inappropriately claimed housing expenses — and where he got the money to pay them back.
The Prime Minister's Office admitted earlier this week that Nigel Wright, Stephen Harper's chief of staff, footed the $90,000 bill for Duffy.
Harper has in the past staunchly defended Wallin, arguing that her travel expenses are "comparable to any parliamentarian" who travels from Ottawa to Saskatchewan, the province Wallin was appointed to the Senate to represent.
In fact, Wallin's travel expenses between the capital and Saskatchewan aren't the problem. From September 2010 to Nov. 30, 2012, she claimed only $29,423 in what's deemed "regular travel" to and from her home province.
It was her "other travel" to destinations elsewhere in Canada and abroad that raised eyebrows, amounting to $321,000 over the same period.
Wallin, who owns a condo in Toronto and another in New York City, has said the problem lies in Senate accounting rules. There are few direct flights to Saskatchewan from the national capital but the Senate counts only direct flights as regular travel while indirect flights are lumped under "other travel," she has said.
"If I fly through Toronto and overnight there en route to Saskatchewan, it is booked as 'other' travel. That's why numbers are distorted,” she told the Toronto Star in February.
There have been reports that Wallin, like Duffy, has repaid at least a portion of her expenses. She has not confirmed that, although her office has not denied it either.
Sources, who spoke on condition of anonymity because they were not authorized to speak publicly, say the external auditor has decided to extend its examination of Wallin's expenses, going back to her appointment in 2009.
The expenses scandal has raised questions about whether Wallin spends sufficient time in Saskatchewan to be legally entitled to sit in the Senate. The Constitution requires that a senator be resident in the province he or she was appointed to represent.
Wallin also owns property in Saskatchewan and has said she spent 168 days in the province last year. However, she holds an Ontario health care card.
Before her expenses came under scrutiny, Wallin was widely thought to be angling to become the next government leader in the Senate, after Marjory LeBreton retires in 2015.
Wallin resigned last month as chair of the Senate's defence committee and as a member of the veterans affairs sub-committee, citing personal reasons.
NDP ethics critic Charlie Angus pounced on Wallin's announcement — and Harper's past expressions of support — as further evidence of rot within the ranks of the upper chamber.
"He told Canadians he had personally reviewed Ms. Wallin's expenses; now we see her either jumping or being tossed overboard to escape from a political scandal," Angus said in a statement.
"With such a large ethical cloud hanging over his office and his government, Stephen Harper must agree to an arms-length independent investigation of these serious allegations."
Also on HuffPost