Youth and Sports Minister Mohamed Barre Mohamud told VOA Somali that Khadijo Aden Dahir had been suspended pending an investigation.
He alleged that the runner, Nasro Abukar Ali, had been selected to represent Somali schools because of nepotism rather than her performance.
On Tuesday, Ali ran the 100-meter-dash in 21.81 seconds, compared with the winning time of 11:58 seconds.
"When we investigated how she went there, she went there through (an) inappropriate process which was not transparent and not in line with the rules," Mohamud said.
"We can confirm that she was taken there through corruption."
Mohamud said Dahir and Ali are related.
VOA Somali has reached out to Dahir, but she has not responded to repeated calls and requests for comment.
Politicians and Somali observers have taken to social media, describing the matter as a "national embarrassment."
"So Embarrassing for the young lady who cannot run. … This is a national tragedy," wrote Ali Said Faqi, a Somali federal lawmaker, on X, the site formerly known as Twitter.
A civil society leader in the diaspora, Zahra Shirwa, was kinder to Ali.
"The only 'tragedy' here is that this young woman is turned to a national punching bag," she wrote. "She was clearly not ready for the competition but, tragedy?
Last week, Ali was seen off from the Mogadishu airport by Somali officials and the Chinese ambassador to Somalia, Fei Shengchao, according to a post on X by Somali National Television.
The Ministry of Youth said the government would investigate the matter and submit conclusions to the justice department.