Boley, who saw his playing time reduced in the final two games of the season, could be the first of some longtime Giants veterans who will not return next season.
The Giants are projected to be $4.7 million over the cap, according to ESPN senior NFL writer John Clayton. Boley was due to make $4.25 million in base salary this coming season.
Boley, 30, had been the Giants' starting outside linebacker for the majority of his four seasons in New York. He was a key part of the Giants' Super Bowl run during the 2011 season.
"Michael Boley was brought here as a fast, athletic, versatile linebacker," Tom Coughlin said in a statement released by the team. "We recognized his special skills were in coverage. He's a smart player who made some big plays for us. He was an integral part of our Super Bowl XLVI championship team. Michael played outstanding football down the stretch for us that season."
Boley finished fourth on the Giants with 84 tackles and had three interceptions and two fumble recoveries this past season -- one of which resulted in a 70-yard touchdown return against Pittsburgh.
The Giants signed Boley as a free agent in 2009 after the linebacker spent his first four seasons in Atlanta.
"Michael came in and learned our defense quickly and he added speed, coupled with big-play ability, to our defensive unit," general manager Jerry Reese said. "He also played an important role in helping us win Super Bowl XLVI. I wish him well as he moves forward in his career."
Boley started 50 of his 57 games with the Giants and had 315 tackles, 3.5 sacks, three interceptions, two forced fumbles and five fumble recoveries (two resulting in touchdowns).
Jacquian Williams is expected to see his role increase with Boley's departure.
Defensive tackle Chris Canty, who also joined the Giants in 2009, said Boley will be missed.
"That's some tough news," Canty said. "Not only is he a good teammate, he's a good friend of mine. Me and him go way back, before the scars. We've known each other a long time. He's a good person. He's a good teammate, good friend."
Canty said the Giants will have a tough time replacing Boley.
"We're going to have to do something, that's the little bit of the shock to the system," Canty said. "He's a terrific football player, he brings speed to our defense, the ability to cover some of those tight ends and those slots that give us some story, he can cover running backs out of the backfield, he gives our defense a lot of versatility. To have to replace a guy like that is tough. Those guys don't come a dime a dozen in the National Football League."
Information from ESPNNewYork.com contributor Matt Ehalt was used in this report.