Doan, 40, has played only for the Coyotes, dating back 21 years, to before the franchise moved from Winnipeg. He was the seventh overall pick by the Jets in 1995.
"After serious consideration, we have decided to not offer Shane Doan a contract for the upcoming season," Arizona Coyotes owner, chairman and governor Andrew Barroway said in a statement. "The time has come for us to move on and to focus on our young, talented group of players and our very bright future. This was a very difficult decision given what Shane has done for the Coyotes and his unparalleled importance to the organization. With that said, this is necessary to move us forward as a franchise."
The move is the latest in a housecleaning conducted by Barroway, who recently took over full ownership of the Coyotes.
The Coyotes have been in rebuilding mode since a run to the 2012 Western Conference finals, a span of five playoff-less seasons that led the franchise to skew toward younger players.
The Coyotes traded 33-year-old Mike Smith, their No. 1 goalie the past five seasons, to Calgary on Saturday and left Doan unprotected in the NHL expansion draft on Sunday. They parted ways -- at least on the ice -- with their captain a day later, leaving Doan to decide whether to retire or join another team.
"On behalf of the entire organization, I would like to sincerely thank Shane for everything he's done for the Coyotes on and off the ice the past 21 years," Barroway said. "Shane is a Valley icon who had an incredible career and was one of the best captains to ever play in the NHL."
Doan became an Arizona icon through the years because of his hard-working mentality, professionalism and connection with the community. The bruising forward was known as one of the NHL's best captains, a leader in the locker room and the ice who earned respect across the league.
Doan had one of the best seasons of his career in 2015-16, finishing with 28 goals and 19 assists, but was limited to six goals and 21 assists last season. He agreed to waive his no-trade clause for the first time last season for a chance to play for a Stanley Cup, but no teams were interested.
Doan could end up with a job in the Coyotes' front office should he decide to retire.
Defenseman Oliver Ekman-Larsson is expected to become Arizona's captain with Doan no longer on the team.
"Shane deserves an enormous amount of credit for keeping the Coyotes in the Valley and for growing the game of hockey in Arizona," Barroway said. "He is beloved by our fans, corporate partners and the media and has been a tremendous leader for us in the community, and a great role model for kids. We wish him and his family all the best in the future. He will be a member of our Pack forever."
In 1,540 career games, Doan scored 402 goals and added 570 assists for 972 points.