Liggins was informed of the team's decision after the Bucks' 110-103 victory over Washington on Saturday night, sources said.
Since joining the team after the preseason, Liggins played 31 games and averaged 15 minutes for the Bucks. In games that Liggins played 18 minutes or more, Milwaukee was 10-1.
Liggins, 31, could be claimed on waivers or become one of the league's top candidates to sign a 10-day contract. There continue to be multiple teams interested in available wing players throughout the NBA.
Liggins impacted the Bucks with a defensive intensity that often proved disruptive on the floor. However, his limited shooting ability created offensive limitations for the Bucks on the floor.
Liggins' waiver will drop the Bucks $5.1 million under the league's luxury tax threshold. Milwaukee has 14 guaranteed deals on its roster now. The league maximum is 15. Liggins was claimed on waivers in October, leading the Bucks to release guard Gerald Green. Milwaukee was the sixth NBA team for Liggins in his career, including stops with Orlando, Oklahoma City, Miami, Cleveland and Dallas since he was drafted out of Kentucky in 2011.