"Earlier this week, Pearce met with Head Coach Adam O'Brien, CEO Philip Gardner and General Manager of Football Danny Buderus, to address recent events and to apologise for the distraction and inconvenience they have caused during the Christmas leave period," the statement read.
"Immediately following this meeting, Pearce met with his teammates and football department staff, to advise the group of his decision to relinquish the captaincy.
"Pearce's decision followed a lengthy review of current issues, last season's performance and reflection upon the added pressure the captaincy brings to both his on field performance and personal life. The club is fully supportive of his decision.
"The Knights will continue work to develop a new club leadership model, with a decision on new club leaders – including who will ultimately perform the role of captain – yet to be made.
"The Newcastle Knights are committed to respecting the privacy of their employees, including any discussion of private matters in the public domain. At the conclusion of tomorrow's media opportunity, no further comment will be made on this matter."
Pearce is expected to address the media about his decision before returning to training on Thursday morning.
Newcastle Knights general manager of football Danny Buderus condemned Pearce's actions on Monday.
"It's not acceptable, there's no doubt about that," Buderus told media.
"It's something we're all striving for … culture. Culture for us is very important; what we stand for is highly important and we need those players to adhere to that.
"There are standards in all parts of our organisation and that behaviour is not acceptable."