Powe, who has been slowed by knee injuries, played in 34 games with Cleveland since signing as a free agent before the 2009 season. He averaged 4.4 points and 2.9 rebounds. He previously played for the Boston Celtics.
Cavaliers general manager thanked Powe for his contributions on and off the court.
The Cavaliers made two deals on Thursday, sending guard Mo Williams and forward Jamario Moon to the Los Angeles Clippers for guard Baron Davis and a 2011 first-round pick. Also, the team traded a second-round pick in 2013 to Boston for rookie big men Luke Harangody and Semih Erden.