Red Bull New York announced on Friday that the club has reached a mutual agreement to terminate the contract of defender Digao.
The Brazilian was signed last September and appeared in one postseason game for the club, without playing in any regular-season matches.
"We have spoken with Digao over the past couple of weeks and believe that this is the best resolution for all parties involved," said Red Bulls sporting director Andy Roxburgh. "We want to wish Digao the best of luck in the next stage of his career."
The 27-year-old has spent time in Italy with AC Milan for a brief spell as well as Rimini, Lecce and Crotone in addition to Standard Liege of Belgium and Portuguese side Penafiel.