Sheffield, 41, told MLB.com that team officials, including Manager Jim Leyland, said they wanted a more versatile roster and could only see a designated-hitter role for Sheffield.
The Tigers will owe Sheffield $14 million for this season. The outfielder will be eligible to sign with any other team once he clears waivers.
Sheffield was the runner-up in American League Most Valuable Player voting in 2004 while he was a member of the New York Yankees. He's played 21 seasons in the major leagues. In addition to the Tigers and Yankees, Sheffield played for Milwaukee, San Diego, Florida, the Los Angeles Dodgers and Atlanta.
He is a career .292 hitter and has 1,633 runs batted in to go with his 499 home runs.