The 49ers on Tuesday made it official by releasing Williams, who had a history of key fumbles.
"He has been released," Williams' agent Wynn Silberman said. "We're looking forward to the opportunity to compete within the league somewhere this year. We're very appreciative of the San Francisco 49ers organization for the opportunity to contribute."
Williams' release had been earlier reported by ESPN contributor Adam Caplan.
"Decisions like these are always difficult, especially at this time of year," said 49ers general manager Trent Baalke. "Kyle and Perrish have represented the 49ers organization very well, both on and off the field. We appreciate their dedication and contributions and wish them all the best."
Williams, who was the 49ers' No. 2 receiver at times this season and the primary punt and kick returner, had lost those prominent roles.
After three fumbles in Week 8 against the Jacksonville Jaguars in London, Williams was replaced by LaMichael James on punts and by Anthony Dixon on kickoffs. Williams' receiving role also has been taken away with Mario Manningham being activated. Michael Crabtree is coming back soon from an Achilles injury.
Williams is a slot receiver and didn't seem to fit the 49ers' plans this season, despite their need for receiving help.
Williams' time with the 49ers will most be remembered for his two fumbles against the New York Giants in the 2011 NFC Championship Game that played prominent roles in the 49ers' defeat. Williams received death threats after the game. However, he bounced back and made contributions last season.
Information from The Associated Press contributed to this report.