The 37-year-old Hernandez was 1-1 with a 4.94 ERA and one save -- the first of his 17-year career -- with the Braves. He gave up seven hits and five runs in 1 2-3 innings against Toronto in his last appearance Sunday.
Braves manager Fredi Gonzalez, who like Hernandez is a native of Cuba, said the move wasn't easy because of his long relationship with the right-hander. Gonzalez was a minor league manager with the Marlins when the team signed Hernandez in 1996.
"I've known him since he was 18," Gonzalez said, adding Hernandez hopes to land with another team.
"There may be some other teams looking for a veteran guy, and I hope so. He still wants to pitch."
Gonzalez said he didn't know if Hernandez would accept an assignment with Gwinnett if he is not signed by another team.
Hernandez signed with the Braves on March 30, one day after he was released by Houston. He has a career record of 175-177 with nine teams. He was 8-13 with a 4.47 ERA with Washington last season.
He set a career high for wins when he was 17-11 with San Francisco in 2000. He won two games for Florida in the 1997 World Series win over Cleveland.
Medlen was sent to Gwinnett on May 29 to work as a starting pitcher. The expectation was he would return to the Atlanta rotation, but Gonzalez said Medlen will pitch in relief. The Braves are keeping Mike Minor and Randall Delgado in the rotation.
Medlen is an option for long relief roles but may work later in games as a setup man for closer Craig Kimbrel. The Braves also have Cristhian Martinez as a long reliever, which also had been Hernandez's role.
Medlen is 1-1 with one save and a 3.49 ERA in 21 games with Atlanta.
Meanwhile, Martin Prado, normally a left fielder and third baseman, is making his first start of the season at first base against Baltimore on Friday night.
Gonzalez said Freddie Freeman "is not quite ready yet" but is improving as he continues to recover from a bruised left index finger and thumb.
Prado played in only two games at first base in 2011 and five games in 2010 but appeared in a combined 45 games at first in 2008-09.