Nishioka, 28, signed a three-year contract in December 2010 but his 2011 season was limited to 68 games by injury and he appeared in just three games for the Twins this year before Friday's roster move.
He hit .226 with 19 runs batted in in 2011 and was 0-for-12 with one RBI -- a game-winning sacrifice fly-- this season. He spent most of 2012 at Triple-A Rochester where he hit .258.
"I would like to thank the Twins organization for helping me fulfill my dream of playing in Major League baseball," Nishioka said in a statement. "I take full responsibility for my performance, which was below my own expectations.
"At this time, I have made the decision that it is time to part ways. I have no regrets and know that only through struggle can a person grow stronger. I appreciate all the support the team and the fans in Minnesota and Rochester have shown me. Arigatou gozaimasu. (Thank you very much.)"
Nishioka, a native of Osaka, played for Japan when it won the inaugural World Baseball Classic in 2006. He also played eight seasons for the Chiba Lotte Marines of Japan's Pacific League. He hit .346 in his final season in Japan.