Since signing a five-year deal worth $37.5 million after being named the defensive player of the year in 2007, the oft-injured Sanders has played in only nine regular-season games.
Sanders played in just one game last season, leaving the Colts' opener on the team's first defensive series with a torn left biceps.
With safety Antoine Bethea signing a four-year, $27 million contract last summer; Melvin Bullitt, Sanders' backup, emerging as a competent starter; and the Colts still trying to sign four-time league MVP Peyton Manning to a new long-term deal, there wasn't enough room to keep Sanders.
When Sanders was healthy, he was one of the league's top defenders.
He played in 14 games in 2005, helping the Colts go 13-0 and earning the first of two Pro Bowl selections. A knee injury limited him to only four regular-season games in 2006, but when he returned for the playoffs, the Colts' run defense improved dramatically and was a key reason they won the Super Bowl.
Sanders was healthy again in 2007, playing in 15 games, earning another Pro Bowl trip and becoming the first Colts player to win the league's top defensive award.
Injuries limited Sanders to only six regular-season games in 2008. He missed the first five games in 2009 following knee surgery, then in his second game back, tore the biceps in his left arm and missed the rest of the season.
Sanders has 373 tackles, 3½ sacks, two forced fumbles, three recoveries and six interceptions in seven NFL seasons.
Information from The Associated Press was used in this report.