Edwards tweeted the news Tuesday, attributing the move to his injury, which "required more time to rehab and hasn't allowed me to re-sync with the offense."
The 49ers confirmed Edwards' release.
"I wish the 49ers organization the best of luck during the playoffs," Edwards said in a statement on his Web site. "I will be working hard this off season to strengthen my knee and prepare for the 2012 season. Thanks for your continued support and for being such loyal fans."
Edwards had 15 catches for 181 yards and no touchdowns in eight games with five starts for the NFC West champion 49ers (12-3) after receiving a $3.5 million, one-year contract in August. That gave him a fresh start under coach and fellow Michigan man Jim Harbaugh.
He was inactive against St. Louis on Dec. 4 and again for the Monday night game. In a loss at Arizona on Dec. 11, Edwards had no catches and expressed his surprise not to be used more in the offense.
Harbaugh has said Edwards' performance in games and practice affected his playing time.
Harbaugh said Monday the team might look outside the organization this week to fill spots -- and that looks to be the case now -- heading into the regular-season finale Sunday at St. Louis. The 49ers are trying to secure the NFC's No. 2 seed a first-round bye.
Edwards, the No. 3 pick in the 2005 draft, got hurt early in Week 2 against Dallas on Sept. 18 and missed four games before returning against his former Cleveland team Oct. 30.
Edwards revealed in late November he also was dealing with a shoulder injury sustained in the fourth quarter of a 19-11 win at Washington on Nov. 6.
In a 16-6 loss on Thanksgiving night at Baltimore to Harbaugh's big brother, John, a second-quarter miscommunication between Edwards and quarterback Alex Smith on a deep throw to the end zone resulted in an interception. The 49ers didn't score a touchdown for the first time all season.
San Francisco had been eager to see Edwards' big-play ability when the club acquired him -- Harbaugh liked his size at 6-foot-3 and 214 pounds -- but it never happened. That lack of production became a bigger deal after the team lost Joshua Morgan to a season-ending leg injury Oct. 9 against Tampa Bay. Morgan underwent surgery to have pins inserted in a broken bone in his lower right leg.
Edwards spent the first five seasons of his NFL career with the Browns, making the Pro Bowl in 2007, before playing the past two with the New York Jets. He also had a series of legal run-ins along the way.
Edwards made 53 receptions for 904 yards and seven touchdowns last season for the Jets and was determined to build on that with his new team. Then the injury delayed his progress.
Edwards made it clear when he discussed the shoulder injury that he hadn't returned to full speed or full strength since the knee injury.
"I'm playing through a football season. No one is ever going to be fully healthy, but just fighting every day," he said. "Injury means you can't play, but I do have a shoulder ailment, I'll say. Little bit of AC joint. Nothing super serious, but at the same time, it's nagging. It bothers me."
Last Tuesday, after a commanding 20-3 Monday night win over Pittsburgh, tight end Vernon Davis tweeted his support of Edwards and later said he was trying to step up as a leader.
"Thankful to have OfficialBraylon on my team. He's a true professional and football is very important to him," Davis wrote. "I think teammates should stick together. At the end of the day we will still be as one when the coaches are gone!"