The forward, who was the second overall pick in the 2008 Draft, was recently arrested on suspicion of possessing marijuana.
The team's president of basketball operations, Lon Babby, said in a statement: "The Suns were devoted to Michael Beasley's success in Phoenix. However, it is essential that we demand the highest standards of personal and professional conduct as we develop a championship culture. Today's action reflects our commitment to those standards."
The former Miami Heat and Minnesota Timberwolves player averaged 10.1 points per game last season.