Only goalie Henrik Lundqvist has been with the Rangers longer than the 33-year-old Girardi. The alternate captain has spent his entire 11-year career in New York.
"I want to thank all of the Blueshirt faithful," Girardi said in a statement. "You are one of the best and most passionate fan bases in the NHL. I appreciate your support over the years. I poured my heart and soul into this team for the past 11 seasons and I enjoyed every minute of it."
Girardi's contract has an annual cap hit of $5.5 million, and his no-movement clause would have made it necessary to protect him in the upcoming expansion draft. By buying him out, the Rangers save almost $2.9 million against the cap next season and almost $1.9 million the following two years.
Girardi has been slowed by injuries in recent years and his performance has suffered. The alternate captain had four goals and 11 assists last season, the third straight year his numbers have declined.
Girardi was an All-Star in 2012.
"Dan's contributions to the New York Rangers organization have been immeasurable," Rangers president Glen Sather said in a statement. "He has been a role model through his relentless determination, giving everything he had to this organization both on and off the ice. He, Pam, Landon and Shaye will always be a part of the Rangers family."
Information from The Associated Press was used in this report.