Ethier received a $2.5 million buyout and will become a free agent.
The 35-year-old was the longest-tenured Dodger after 12 seasons with the club. However, his role was sharply reduced due to a fractured tibia in 2016 and a herniated disk in his back this year.
Ethier drove in Los Angeles' lone run with a pinch-hit single in the Game 7 World Series loss to the Houston Astros on Wednesday.
Ethier was 4-for-13 (.308) with a homer in the postseason after having just 34 at-bats and hitting two home runs in the regular season.
The two-time All-Star batted .285 with 162 homers during his time with the Dodgers.
He was a minor league player in the Oakland organization when Los Angeles acquired him in a deal that sent Milton Bradley to the Athletics prior to the 2006 season.