The decision means Owens, a former Dallas Cowboys All-Pro, will become an unrestricted free agent on March 5, the Bills said in a statement.
The 36-year-old caught 55 passes for 829 yards and five touchdowns during his only season with Buffalo.
He also caught his 1,000th career pass last season, becoming the sixth NFL player to reach the milestone. He ranks third in NFL all-time receiving with 14,951 yards.
(Reporting by Gene Cherry in Salvo, North Carolina)