The cornerback, who joined the NFC North side from the Oakland Raiders in 2006, had been due to earn $9 million (£5.8 million) with the Packers in the 2013 season.
Packers general manager Ted Thompson said in a statement: "We are grateful for all that Charles has given to the Green Bay Packers over the past seven years. He has been an integral part of the Packers' success, and our Super Bowl title in 2010 would not have been possible without his contributions.
"A once-in-a-generation talent as a player, he is also a great leader and ambassador for the organisation off the field. Charles will always be a member of the Packers family and we look forward to his eventual induction into the Pro Football Hall of Fame. We wish him and his family all the best."
The 36-year-old was named NFL defensive player of the year in 2009.