The Sacramento Kings reportedly told Fredette they would not exercise the 2014-15 team option, for which he would have been paid $3.1 million.
The decision has not been announced officially, but Fredette has already caught wind of the decision.
"This is a business decision for the King and they are doing what they believe is best for the organization. I will continue to work hard and be the best I can be moving forward in my career."
Fredette was taken 10th overall in the 2011 draft out of Brigham Young University, but did not play in the season opener against the Denver Nuggets.
He will be a free agent this summer, but whether he gets to play before then is still in question. His contract, worth $2.4 million, will expire at the end of the season.
About six teams have expressed trade interest in Fredette and, to the surprise of some with knowledge of the situation, the Utah Jazz is not known to be among that group.