Team owner Jim Irsay released the 2007 NFL defensive player of the year Friday, announcing the decision less than 24 hours after he told reporters he would make a decision about Sanders' future before March 3.
"We thank Bob for all his incredible contributions, from his Super Bowl interception to his defensive player of the year honor," Irsay said in a statement.
The move was not a major surprise. After winning the league's top defensive honor, Sanders signed a five-year, $37.5 million contract but played in only nine regular-season games the next three seasons.
With safety Antoine Bethea signing a four-year, $27 million contract last summer; Melvin Bullitt, Sanders' backup, emerging as a competent starter; and the Colts still trying to sign four-time league MVP Peyton Manning to a new long-term deal, there wasn't enough room to keep Sanders.
The Colts gave Manning the exclusive franchise tag Tuesday, a move that would pay Manning about $23 million next season if he plays under the tag.
Given those constraints, Indianapolis could no longer afford Sanders -- and everyone knew it.
Last month, Sanders' agent, Tom Condon, told The Associated Press he "anticipated the same thing you do" when asked whether the Colts inquired about redoing Sanders' contract or letting him hit the free-agent market. A message left for Condon Friday was not immediately returned.
"I want to thank Mr. Irsay for the opportunity to play with the Colts," Sanders said in a statement released by the team. "I appreciate all he and the organization did for me throughout my career, and I always will consider myself a Colt. I want to thank the fans also for their great support. They played a big part in making my seven years with the team very rewarding."
When Sanders was healthy, he was one of the league's top defenders.
He played in 14 games in 2005, helping the Colts go 13-0 and earning the first of two Pro Bowl selections. A knee injury limited him to only four regular-season games in 2006, but when he returned for the playoffs, the Colts' run defense improved dramatically and was a key reason they won the Super Bowl.
Sanders was healthy again in 2007, playing in 15 games, earning another Pro Bowl trip and becoming the first Colts player to win the league's top defensive award.
But even Sanders acknowledged his reckless style likely would shorten his NFL career, and some fans even wanted the Colts to keep Sanders on the bench until the playoffs started.
There was a reason for all of it.
Injuries limited Sanders to only six regular-season games in 2008. He missed the first five games in 2009 following knee surgery, then in his second game back, tore the biceps in his left arm and missed the rest of the season.
Sanders didn't even make it through that many games last year. He tore his right biceps on the first defensive series of the season opener and did not play again.
That left Sanders' future with the Colts in jeopardy.
"Before March 3, I think we'll probably have some sense on that direction," Irsay said Thursday when asked about Sanders. "Again, there's nothing definitive. We've talked through a lot of different scenarios, I can't say definitively what direction we're going there."
On Friday, Irsay made it official.
Sanders had 373 tackles, 3½ sacks, two forced fumbles, three recoveries and six interceptions in seven NFL seasons.