Gilbert has been given an unconditional release from his scholarship to find another school.
Gilbert, a former high school national player of the year, came off the bench as a freshman to replace injured Colt McCoy in the 2010 BCS championship game that ended with a loss to Alabama.
He started every game in the 2010 season when Texas fell to 5-7 and missed a bowl game for the first time since 1997.
Gilbert was benched earlier this season after throwing two interceptions against BYU, a game Texas came back to win.
"This was a very difficult decision because I love The University of Texas and have had a great time playing there," Gilbert said. "I've talked to Coach [Mack] Brown, [offensive coordinator Bryan] Harsin and the staff and have decided it is in my best interest to transfer. I can't thank all of my teammates and everyone at Texas enough for all of their support, but I just think I'm at a point in my life where I need a fresh start."
Gilbert injured his shoulder in the season opener and underwent season-ending surgery after being benched.
"Garrett is a terrific young man and we are very appreciative of everything he has done for our program," Brown said. "I know this has been a tough decision, and I can't thank him enough for hanging in there, helping the younger guys and being a great team guy even after he hurt his shoulder. We talked about his decision and we all fully support him. Whatever school he decides to go to will get a guy who will work as hard as anyone and compete both on the field and in the classroom."
Texas plays Oklahoma on Saturday in Dallas at the Cotton Bowl at noon ET.