Castellanos informed the Reds of his decision Thursday, opting out of the final two years and $34 million on his deal.
Castellanos had two opt-out clauses in his four-year, $64 million deal, but he did not exercise the first one after the pandemic-shortened 2020 season. The Reds are expected to extend him the $18.4 million qualifying offer, which would yield Cincinnati a compensatory 2022 draft pick after the first round if Castellanos signs with another team.
Castellanos' decision comes one day after Reds general manager Nick Krall said the organization "must align our payroll to our resources and continue focusing on scouting and developing young talent from within our system."
Krall told reporters that he expects the Reds, who had a $130 million payroll in 2021, to take a "wait-and-see" approach to free agency this offseason.
"I don't think we're not going to sign players on the free-agent market," said Krall, who addressed the team's offseason plan after Wednesday's trade of veteran catcher Tucker Barnhart to the Detroit Tigers. "I think it's something that this move did not make sense from where we were with payroll. We had to make sure we made the adjustment."
Although he acknowledged the uncertainty surrounding upcoming labor talks and a new collective bargaining agreement for Major League Baseball, Castellanos said last month that the 2021 season with the Reds was "the most consistent, happiest I've been playing baseball."
Castellanos, 29, will enter free agency coming off one of the best seasons of his nine-year career. A first-time All-Star in 2021, he batted .309 with 34 home runs and a .939 OPS -- all career bests -- and also led the Reds with 100 RBIs.
A first-round draft pick in 2010 who spent the majority of his career with the Tigers, Castellanos will become one of the best hitters in a free-agent class that also includes former MVPs Freddie Freeman and Kris Bryant, MLB stolen bases leader Starling Marte and star shortstops Carlos Correa, Corey Seager, Trevor Story, Marcus Semien and Javier Baez.
Castellanos is a career .278 hitter with 168 homers in parts of nine seasons with the Reds, Tigers and Cubs.