Morris, a first-round pick by the Colts in 2000 out of Brigham Young, hurt his left knee against Denver in Week 4 and was placed on injured reserve in October. The 33-year-old Morris played in just two games last season, finishing with 13 tackles. He sat out two games with an abdominal strain and then injured the knee against the Broncos in his first game back.
His base salary in 2007 was $900,000 and was due to rise to $1.2 million this year and $1.6 million in 2009.
McFarland, obtained in a trade from Tampa Bay in 2006, helped shore up the Colts' run defense during their Super Bowl run but tore a knee tendon in training camp last summer and missed the entire season.
A first-round pick out of LSU in 1999, McFarland was paid $5.5 million last season and was due to receive $6.9 million in 2008.