Davis, who was acquired in the trade that sent longtime Rangers shortstop Elvis Andrus to the Oakland Athletics, has two home runs and five RBIs in 22 games with Texas. He began the season on the injured list with a strained left quad.
General manager Chris Young and manager Chris Woodward both said the team needs to find out about its young players, and there will now be more opportunities to do that.
"It's less about Khris Davis' performance and more about the club in general, the state of our group and where we are and what aligns with our goals for this year,'' Young said. "This was really, really hard in a lot of ways because we love having him around and the influence that he's had on our group. But unfortunately, the performance has been probably a little less than we expected, and certainly we need to take a look at our younger guys.''
Davis, 33, led the American League in home runs in 2018 for the A's when he hit 48 and went on to win the Edgar Martinez Award as the major leagues' top designated hitter.
His 2018 season capped a run of three straight seasons of 42 or more home runs and 102 or more RBIs. He also hit .247 in each season.
For his career, Davis has 220 homers, 585 RBIs and a .241 batting average.
The Rangers now have seven days to trade or release Davis, who also could be sent to the minors if he were to accept such a move.
The Rangers recalled infielder/outfielder Eli White from Triple-A Round Rock in a corresponding move.
White made the Rangers' Opening Day roster, but hit .127 over 22 games and was in a 1-for-30 slump before being optioned to Round Rock on May 8, when the Rangers activated Davis for the first time this season. White batted .343 and started at five different positions in 20 games for Round Rock.
"I'd like to see him kind of move around a little bit,'' Woodward said. "He came into camp, made the team, earned it. Obviously didn't perform as well as he'd like, went back down. ... He's earned the right to be back here with this opportunity.''
The Associated Press contributed to this report.