Prosecutors charged Ishchenko, 33, with abuse of office and put him in pre-trial detention center on May 30.
"Ishchenko, while formally remaining the head of the city administration, continues to influence his subordinates and therefore could apply pressure on witnesses and interfere with the preliminary investigation," a local prosecutor said.
"Today's decision takes all responsibility for what is happening in the city from me," Ishcnenko said, adding that his lawyers were preparing to appeal the decision in Russia's Supreme Court, the Public Chamber and the European Court of Human Rights in Strasbourg.
The case against the Volgograd mayor is the latest in a series of corruption probes against officials in Russian provinces. His detention followed the arrest of the Nenets Autonomous Area governor on embezzlement charges in May.