Diego Costa and his club Atletico Madrid have agreed to break the contract, the club announced in a statement.
Costa, who represents Spain in the national team context, is now free to find a new club.
The 32-year-old spent three years at Chelsea before joining Atletico.
The striker has been given sparse playing time this year.
He has only started two matches, and accounted for as many goals.
Costa has had major problems with muscle injuries over the years, and the Spanish newspaper AS wrote this week that Arsenal are considering picking up the striker in January.
Atlético Madrid tops La Liga.