General manager Chris Wallace announced the move Saturday. The Grizzlies waived Law before the team left for a four-game road trip starting Sunday in Denver with the Nuggets.
The Grizzlies signed Law in August, hoping he could run the offense and come off the bench.
But the guard who was the 11th pick overall in 2007 by Atlanta played in only 11 of Memphis' first 20 games and was just 3 for 19 from the floor, missing all six of his 3-pointers.
He had 14 assists with four steals but also had 10 turnovers.