The 31-year-old joined the Tractor Boys in 2011 but only managed to make a total of 19 appearances for the club.
"It hasn't really worked out for me at Ipswich for one reason or another but I wish the club all the best for the future," Ellington told the club's official website.
"Mick McCarthy is a terrific manager and treats you with respect. He has been great to me since he arrived at the club and Ipswich are in good hands with him in charge.
"It's a terrific football club but it's the right decision for me to move on. I still want to carry on playing and have already started looking for a new club."
Ellington has previously played for a host of teams, including Wigan Athletic and West Bromwich Albion.