Garra Dembele and Freiburg are to go separate ways after the 28-year-old's contract was terminated by mutual consent.
The Mali striker cost Freiburg a club record 2.3 million euros when he joined from Levski Sofia in 2011, but after scoring only one goal in 19 appearances, he was loaned out to Chinese club Wuhan Zall.
Dembele was demoted to Freiburg's reserve team this season, but has now been released.
"We're very happy to have finally found a solution," said Freiburg's director of sport Jochen Saier to the Bild newspaper.
"We wanted to avoid a legal battle, which is the direction things seemed to have been heading in lately."
Dembele, who started his career at French club Auxerre B, is now free to find himself a new employer for next season.