Magic coach Frank Vogel confirmed the move Saturday, declining further comment other than to wish Payne well.
Payne was part of an ESPN report detailing sexual assault allegations against former Spartans. The 6-foot-10 forward was drafted No. 15 overall out of Michigan State by Atlanta in 2014 and was traded to Minnesota during his rookie season.
The Magic signed him to a two-way contract last August. He played just five games for Orlando in the NBA and spent much of the season with its G League team.
Payne has averaged 4.0 points and 2.9 rebounds in 107 NBA games.