Williams, 26, has missed 22 games over the past two seasons because of neck injuries. His most recent neck injury came on a block by Dolphins wide receiver Jarvis Landry in October that landed Williams on injured reserve for the second consecutive season.
Williams initially injured his neck on an attempted tackle in a September 2015 game against the New England Patriots that resulted in numbness and Williams' being transported from the field to the hospital in an ambulance. He underwent surgery later that season to shave vertebrae in his neck, but returned to play in 2016.
Rookie Bills coach Sean McDermott said releasing Williams was strictly "a football decision" and reflected a change in the defense's philosophy.
The decision came two months after Williams' father, Anthony Williams, told The Associated Press his son was leaning toward continuing his career. Aaron Williams also indicated he was planning to return as recently as Wednesday, when he posted a note on his Instagram account congratulating starting quarterback Tyrod Taylor for restructuring his contract and remaining in Buffalo.
The move will save $1.775 million in salary-cap space for the Bills in 2017, unless the team designates Williams as a post-June 1 cut. If the Bills do, Williams' full $6.625 million 2017 salary-cap hit will remain on their books until June 1, at which point they will save $4.2 million against their 2017 salary cap and take a $2.425 million dead-money hit in 2018.
Williams had two seasons left on his contract and was scheduled to make a $3.6 million base salary this season.
Williams thanked Bills fans in a note posted on his Twitter account. He didn't provide any hint toward whether he'll resume playing, except to say: "God has a plan for me; excited for what He has planned for me."
Williams' release opens a void for the Bills at safety, where the 2011 second-round pick started 36 games from 2013 through 2016.
Information from The Associated Press was used in this report.