The Titans signed Williams, the 10th overall pick in the 2005 draft by the Detroit Lions, last Thanksgiving and told him after the season to get his weight and conditioning under control.
Williams weighed around 270 pounds when he signed with Tennessee and lost more than 30 pounds this offseason in an effort to salvage his career.
But conditioning, weight and endurance remained issues for the former University of Southern California star, who had unsuccessfully petitioned the NFL for early entrance into the 2004 draft.
"I just wasn't seeing the production, and when you get in a situation where you don't see the production, and you've got a young group of receivers that are emerging, I just felt like it was in our best interests to let him go at this point," coach Jeff Fisher said. "Maybe Mike can hook on some place else."
Williams spent two seasons with the Lions, catching 29 passes for 350 yards and a touchdown in his rookie year. He was traded to Oakland during the 2007 draft, but the Raiders released him in October after he dropped a key fourth-down pass against the Titans in a 13-9 loss.
LenDale White, a Titans running back and Williams' former teammate at Southern Cal, said: "You've got to do what's right for the team. I guess it's the right move for the team. Hopefully, it is."
Tennessee also signed kicker Jon Vaughn, who was in camp with the club last year, to fill in for Rob Bironas after he strained his groin Monday. Guard Eric Scott was waived to make room.