The 22-year-old midfielder joined the Blues from Fjellhamar in 2007 but has failed to make an impact at the Etihad Stadium.
Ibrahim is now expected to join Greek side Olympiacos.
THE club can confirm that Abdisalam Ibrahim has been released from his contract. We wish him well for the future.— Manchester City FC (@MCFC) January 22, 2014
Ibrahim has spent the last two seasons on loan with Norwegian outfit Stromsgodset.