The move signals an end of an era for DiPietro, the former first overall pick who has been hampered by numerous injuries throughout his ill-fated career.
DiPietro, who inked a 15-year, $67.5 million deal back in 2006, will be paid out $1.5 million annually over the next 16 years, per the rules of the compliance buyout in the NHL's new collective bargaining agreement.
Once bought out, DiPietro will be free to sign with another team as an unrestricted free agent, assuming he can find work.
DiPietro played only three games this season with the Islanders before he was waived and sent down to the team's minor-league affiliate in Bridgeport, Conn. He has played just 37 games over the last three NHL seasons.
At the draft on Sunday, Snow was asked whether he planned to use his allotted compliance buyout, but he did not tip his hand.
"Well, we don't have to make that determination today," Snow said. "We're focused on the draft. We'll make any decision at the appropriate time and now is not that time."
Snow also declined to say whether DiPietro had been medically cleared, though that answer is now obvious. A team cannot buy out an injured player.
DiPietro could not be immediately reached for comment.
DiPietro's career with the Islanders was the most compelling of many goaltending sagas that has hamstrung the franchise in recent years. Heading into free agency, the Islanders appear to be in a bind once again between the pipes.