Los Angeles announced the move Wednesday. Guerrero had been designated for assignment on May 31.
"You know what, I don't know what his fate is, but with where we're at and the construction of our roster, it just didn't make sense," manager Dave Roberts said. "It's one of those things that you hear it a lot, you hear it every year: It's a numbers game. Obviously we wish Alex the best."
Guerrero, 29, signed with the Dodgers in October 2013. He hit .224 with 11 homers and 36 RBIs while appearing in only 117 games for the Dodgers during the 2014 and '15 seasons. He played third base and left field.
Guerrero began this season on the disabled list with a knee injury and played in 16 rehab games in the minors.
His contract called for a $10 million signing bonus and salaries of $4 million in each of the first two seasons and $5 million in each of the last two. There was $3,196,721 remaining on this year's salary.
Information from ESPN.com's Doug Padilla and The Associated Press was used in this report.