It comes as the MTA has been trying to crack down on fare evasion at some of its busiest stations.
The guard is accused of taking cash from subway commuters and tapping them into the system using an OMNY card assigned to the New York City Department of Education for student use.
It happened in Brooklyn at the 8th Avenue-N line station's main entrance.
Officials say the guard pocketed the money without informing her employer or New York City Transit.
The Office of the MTA Inspector General said there is video evidence of five separate incidents where the guard appeared to take cash for taps.
The Inspector General said the guard admitted she sold the OMNY taps for cash. She initially claimed she used her own, personally funded card, but officials say when she was informed it was a DOE student card, she said she found it on the street.
NYC Transit told the OIG it has prohibited the guard from working for the agency and that the contractor was conducting a full review of its policies and procedures.
"The gate guards are paid to deter farebeating and provide a sense of security to the riding public, not to improperly sell subway system entry and pocket the cash," said IG Daniel Cort. "I am grateful to the rider who reported this misconduct and appreciate NYC Transit's thorough response, which led to the guard's removal from working in the subway system."
The MTA is defending the contracted guard program, saying most of the contractors have done a good job keeping the gates closed. But in this case, a spokesperson says the guard will never work on MTA property again:
"Taking cash to illegally swipe riders into the subway is the exact conduct this person was assigned to prevent," the spokesperson said.
The MTA Inspector General concluded the employee's actions were so minor they do not warrant criminal referral.
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