General manager Mike Tannenbaum said Monday that the team told Jones it will cut ties with him when the league's free agency period begins Friday.
"Thomas joined us three years ago and has been a productive, passionate leader both on and off the field who has served as a positive influence for our younger players," Tannenbaum said in a statement. "We were fortunate to acquire Thomas and wish him the best."
Jones was due a $3 million roster bonus on top of a $2.8 million base salary this season. He and the Jets failed to reach a compromise on restructuring his contract; the team wanted him to take a pay cut.
Drew Rosenhaus, Jones' agent, didn't immediately respond to e-mails seeking comment.
Jones sat out voluntary activities last offseason while trying unsuccessfully to renegotiate his deal, which was front-loaded with $13.1 million over the first two seasons. He made only $900,000 in base salary last season, but didn't allow it to affect his play.
The 31-year-old is coming off a season in which he set career highs by rushing for 1,402 yards and 14 touchdowns while helping the Jets reach the AFC Championship Game against Indianapolis. He was also a popular presence in the locker room, twice being voted the team's most inspirational player by his teammates.
Jones had a career-high 331 carries in the regular season and appeared to wear down a bit down the stretch as rookie Shonn Greene got the majority of carries. Still, with the game on the line against San Diego and the Jets facing fourth-and-1 late, coach Rex Ryan put the ball in Jones' hands to make a first down that clinched a trip to Indianapolis.
"When I got here, Thomas immediately became one of my guys," Ryan said in a statement. "He had one of his best years last season, might have been his best. I have a tremendous amount of respect for him as a player and a person. This is one of the tough decisions we had to make for our organization."
Jones' departure leaves Greene, the team's third-round pick last year, as the likely starter in the backfield. The Jets also anticipate having a healthy Leon Washington, who's recovering from a broken right leg that sidelined him for the last nine games of the regular season and the playoffs.
Jones is the latest big-name running back to hit the free agent market after San Diego recently released LaDainian Tomlinson, Philadelphia let go of Brian Westbrook and Cleveland cut ties with Jamal Lewis.
Jones was acquired from Chicago three years ago, and rushed for 3,833 yards and 28 touchdowns for the Jets. He finished third in the NFL in rushing, a year after leading the AFC and making his first Pro Bowl. Jones ranks second only to Tomlinson in yards rushing since 2005.
While he's at an age -- Jones turns 32 in August -- when many NFL running backs start to slow down and, in some cases, break down, he said earlier in the season that he thinks he can play another four or five years.
"Whoever came up with that rule obviously didn't play running back in this league, didn't prepare like I prepare, didn't watch film like I watch film, didn't take care of their body like I take care of my body," Jones said last October. "Physically, I feel like a rookie."
He keeps himself in terrific shape with a strict workout routine and also doesn't have the wear and tear that perhaps other running backs his age have. He never had more than 138 carries until his fifth season.
After being drafted seventh overall by Arizona in 2000, he was traded to Tampa Bay in 2002 and signed with the Bears as a free agent in 2004. Jones ranks 28th on the career list with 9,217 yards, 190 behind Earl Campbell.