Murray, 30, has been the Titans' lead back the past two seasons, including in 2016, when he was the AFC's leading rusher with 1,287 yards.
He had a career-low 659 rushing yards and tied for a career low with 3.6 yards per carry in 2017, primarily due to injuries and a lack of explosiveness. He failed to reach 1,000 yards from scrimmage this season for the first time since 2012.
"I want to thank DeMarco for his contributions as a Titan, not only for what he did on the field but also in the locker room and in the community," Titans general manager Jon Robinson said in a statement. "He was a pro in every facet, and we wish him and his family the best moving forward."
The Titans plan to feature 2016 second-round pick Derrick Henry in a more prominent role next season. Henry was the more productive runner of the two backs last season, but former Titans coach Mike Mularkey had an affinity for Murray and his versatility in the passing game, which led the veteran back to receive more snaps.
Murray had two years remaining on a deal that Robinson renegotiated after acquiring him via trade from the Philadelphia Eagles in March 2016. Murray's contract was set to pay him $6.5 million in 2018 and $6.75 million in 2019, but the Titans will not take on any dead money by releasing him.
Robinson and new coach Mike Vrabel were noncommittal on Murray's status at the NFL combine, but they heaped praise on Henry. Robinson said he believes Henry can be a three-down feature back, and he'll now get that opportunity.
"He's catching the ball better. I thought he caught the ball better this past season than he did his rookie year," Robinson said of Henry. "He's obviously a little bit more acclimated to the pro game, even though those Alabama teams, there's quite a few pro players on those teams. He can be a guy we hand the ball to and throw it to."
Henry, a Heisman Trophy winner, rushed for 744 yards last season and averaged 4.2 yards per carry. The Titans will now look to free agency or the draft to find a pass-catching back to complement Henry in the backfield.
In mid-January, Murray laughed off the notion that his time as an NFL starter was over. After starting all 31 games he played for the Titans, he said he "definitely" believes he can still be a highly productive feature back in the NFL.
"I feel very confident in myself. Excited for the future. Excited for my future. I know what type of player I am," Murray said.