With the move, Norman immediately becomes a free agent.
The Panthers placed the tag on Norman last month, guaranteeing him $13.952 million in 2016. But Norman never signed the tag and was planning to skip at least the first part of offseason workouts that begin on Monday.
According to a league source, Norman was seeking a long-term deal worth between $15 million and $16 million a year, an estimate based on what could be had on the open market. The Panthers made one offer for close to $11 million and never moved off that mark, according to the source.
"After a number of conversations with Josh's agent we realized that a long-term deal was not attainable," general manager Dave Gettleman said in a statement. "We have decided to rescind the franchise tag freeing Josh to immediately become a UFA. We thank Josh for all his contributions and truly wish him well."
When reached by the Associated Press, Norman said: "Man, I just don't feel like talking about it right now."
Norman was attending a funeral on Wednesday, according to a source.
Gettleman said when he initially used the tag, it was his hope to secure a long-term deal with Norman before the July 15 deadline.
He said last month at the NFL owners meeting that he would be "very comfortable'' if Norman played under the tag, but remained optimistic a long-term deal could be done.
But the two sides never were close in negotiations, so the Panthers opted to move on and not risk Norman's contract situation becoming a distraction.
Only six to eight teams have room under the salary cap to realistically offer Norman in the $16 million range. Among the teams in need of a cornerback are San Francisco, which is $52 million under the cap, and Tennessee, which is $28.1 million under the cap.
The Panthers possibly could re-sign Norman if he comes back at a lower number after testing the market. They re-signed defensive end Charles Johnson to a one-year deal after releasing him to clear $11 million under the cap.
But that seems unlikely, considering Norman is expected to be in high demand. Ten teams already have made inquiries, according to a source. Among those teams interested in Norman are the San Francisco 49ers, Washington Redskins, Tampa Bay Buccaneers, New York Jets, Chicago Bears, Miami Dolphins, Tennessee Titans and Pittsburgh Steelers, the source said.
With Norman gone, the Panthers are left with only five cornerbacks that have started a combined 34 out of the 186 games in which they have played.
Bené Benwikere, coming off a fractured leg suffered in December, was set to challenge for the every-down corner spot opposite Norman after spending most of the past two seasons as the nickelback.
Benwikere has 10 career starts.
Brandon Boykin, signed to a one-year deal in free agency after three years in Philadelphia and one in Pittsburgh, was expected to compete for the starting nickel job. He has seven career starts in 64 games.
Robert McClain leads Carolina corners in starts with 17 in 66 games. He started all three playoff games after replacing veteran Charles Tillman, who suffered a season-ending ACL injury. Tillman, 35, remains unsigned.
Norman was entering his fifth NFL season after being selected in the fifth round of the 2012 draft out of Coastal Carolina.
He had a breakout year with four interceptions in 2015, helping Carolina lead the league with 24 interceptions and 39 takeaways. He returned two of the interceptions for touchdowns. Opposing quarterbacks had a passer rating of 54.0 against Norman. No cornerback was more efficient, according to Pro Football Focus.
Norman also had 16 passes defensed, three forced fumbles and two fumble recoveries.
He was the sixth player in team history to receive the franchise tag, joining punter Todd Sauerbrun (2003), tackle Jordan Gross (2008), defensive end Julius Peppers (2009), center Ryan Kalil (2011) and Greg Hardy (2014).
It is rare for a team to remove the franchise tag from a player -- the last case came in 2009 -- but Norman wasn't the first player this year to have any kind of tag rescinded. Miami rescinded the transition tag on defensive end Olivier Vernon on the first day of free agency. The New York Giants signed Vernon to a five-year, $85 million deal with a $52.5 million in guaranteed money.