The wide receiver made 41 catches for 443 and four touchdowns during the 2012 season.
General manager Buddy Nix said in a statement: "We have made the decision not to re-sign Donald.
"We're going in a different direction and this move today gives Donald the opportunity to catch on with another team early on in the process.
"We thank him for his years with our organisation and wish him the best in the future."
The 25-year-old has spent three seasons with the Bills, having been signed as an undrafted player in 2010.