After completing two 10-day contracts with the team, Stephenson had to either be signed for the remainder of the season or let go. Minnesota has chosen to go in a different direction, sources said, and Stephenson will become a free agent.
Stephenson, 26, is battling a nagging ankle sprain that has limited his time on the court. The Timberwolves elected not to fly him to Miami for Friday's game because of the minor injury. Sources said he should be fully healed within six days.
He appeared in six games for the Timberwolves and averaged 3.5 points and 1.7 rebounds.
The seventh-year veteran started the season with the New Orleans Pelicans, but they waived him on Nov. 7 after he tore his groin.