The Maple Leafs announced their intention to part ways with Grabovski by placing him on waivers with the intention of buying out the final four years of his contract.
"It was not an easy decision to make as Mikhail made numerous contributions to our hockey club," Toronto general manager Dave Nonis said. "This is a roster move that will give us salary cap flexibility moving forward."
The Maple Leafs' decision to waive Grabovski came after they signed him to a five-year, $27.5 million contract in March.
A person familiar with the moves told the AP that New Jersey goalie Johan Hedberg, Colorado defenseman Greg Zanon, Nashville defenseman Hal Gill and Edmonton center Eric Belanger were also placed on unconditional waivers and are eligible to have their contracts bought out. The person spoke on the condition of anonymity because the NHL doesn't announce the moves.
Players who have contracts bought out on compliance buyouts don't count against the salary cap. They do receive two-thirds of their remaining salary spread out over double the years left on the deals.
Grabovski is a three-time 20-goal scorer, but he is coming off an inconsistent season in which he had nine goals and seven assists in 48 games. His best season came with Toronto in 2010-11 when he had 29 goals and 29 assists in 81 games.
The Maple Leafs' decision to free up cap space is a clear sign they intend to be aggressive in free agency to continue improving a team coming off its first playoff appearance since 2004. The Leafs were knocked out by Boston in a seven-game, first-round series.