Williams was set to make $3.5 million in 2019 as part of the four-year, $17 million deal he signed in 2017. By declining the option, the Cowboys will save $2.25 million in cap space.
Williams had a forgettable 2018, catching just two passes for 18 yards in three games before being inactive for a game and ultimately placed on injured reserve for the season with a foot injury. He suffered a broken foot last winter, was held out of most of the offseason program and was limited for a time during training camp, and never appeared 100 percent. He also served a three-game suspension for violating the NFL's substance-abuse policy, stemming from an offseason arrest.
He also never found a role as the Cowboys opted to go more with free-agent pickups Allen Hurns and Deonte Thompson, as well as rookie Michael Gallup, as the outside receivers in the first month of the season. Prior to 2018, Williams had played in all 80 games in his first five seasons and had 230 receptions for 3,359 yards and 20 touchdowns, including the final touchdown pass of Tony Romo's career in 2016.
With the trade for Amari Cooper, the development of Gallup, the role of Noah Brown, as well as the possibility of re-signing Cole Beasley or Tavon Austin, the Cowboys did not have room for Williams. Wide receiver could be among the Cowboys' draft needs as well.
By not picking up the option, the Cowboys can potentially recoup a compensatory pick in 2020.
In other developments, a source told ESPN that the Cowboys have no plans to re-sign defensive lineman David Irving, who played in just two games last season after opening the year on a four-game suspension for violating the NFL's substance abuse policy.