With Williams healthy from his calf injury, the Bills agreed to outright release the wide receiver, making him free to sign with another team, his agent, Hadley Engelhard, had earlier told ESPN NFL Insider Adam Schefter.
Engelhard added that this will give his client a chance to sign with a playoff contender or get a head start on finding a team for 2015.
Before his release, Williams had been under contract with the Bills through 2018. His deal includes a $5.2 million base salary next season that will not become fully guaranteed until the third day of the league year in March.
Williams, acquired by the Bills in a trade this offseason for a 2014 sixth-round pick, expressed frustration in recent months about his diminished role in the Bills' offense. After starting 52 games in his first four seasons, Williams saw little playing time this season. He was a healthy scratch for two games and was relegated to the scout team in practice.
In nine games active this season, Williams caught eight passes for 142 yards and a touchdown.
ESPN.com's Mike Rodak contributed to this report.