The Tigers suspended the 32-year-old midfielder in July for a breach of club discipline during a pre-season tour of Slovenia.
Bullard made 24 appearances in two years at the KC Stadium and spent the second half of last season on loan at Ipswich Town.
"I can confirm that the club has given notice to terminate the contract of Jimmy Bullard," Hull's chief executive Mark Maguire told the club's official website.
"He has a right of appeal. It would be inappropriate to make further comment that might prejudice this process."
Bullard became Hull's record signing when he joined from Fulham for £5m in 2009.