The team announced the move Thursday, ending a monthslong saga involving the star offensive tackle and the team. Sources said the Redskins likely will look to trade Williams in the offseason, something they were reluctant to do before the deadline, barring the ability to land a playmaker or a high pick.
Williams last week revealed a cancer diagnosis that played a part in his lengthy holdout and distrust of the Washington medical staff and organization.
He said he told the team of the medical issue six years ago and that a growth on his head grew substantially over time. Williams said he had a tumor removed from his skull and needs to get checked out every six months to make sure he's OK.
The seven-time Pro Bowl selection underwent three surgeries during the offseason to remove the tumor and remained away from the team during that time. Williams said he was "told some scary things'' by doctors that changed his outlook on life.
The Redskins later released a statement saying they requested that the NFL's management council convene a joint committee with the NFL Players Association to review the medical records and care given to Williams.
After reporting to the Redskins on Oct. 29, Williams told the team that he felt discomfort on his scalp after putting on a helmet during his physical. It was enough for the Redskins to fail his physical. The team had been trying to find a customized helmet for Williams.
Williams also expressed dissatisfaction with his contract, which runs through 2020 without guaranteed money. Despite returning, he would not commit to playing again for the organization that drafted him fourth overall in 2010.
The holdout was an expensive one for Williams. He was fined at least $1.2 million this summer while also losing 25% of his signing bonus proration for missing training camp, and another 25% for missing the first game. He missed eight game checks at $638,000 per week as well. In total, the holdout cost him approximately $7 million.
The NFLPA also came to Williams' defense Sunday, tweeting a statement that accused the NFL Network and analyst Charley Casserly -- a former Redskins general manager -- of using misinformation in an attempt to tarnish Williams' reputation.
ESPN's John Keim and The Associated Press contributed to this report.