The move is the first of several that will have to be made at cornerback as the Broncos rebuild their depth chart at the position after a season that saw four cornerbacks, including Bryce Callahan, finish the year on injured reserve. Bouye also missed the last four games of 2020 due to a six-game suspension for violations of the league's policy on performance-enhancing substances.
The 29-year-old will still be suspended for the first two games of the 2021 season.
The move will free up $11.7 million against the Broncos' salary cap and the team will now have just under $31 million worth of salary-cap space overall as they begin to work through their offseason plan.
George Paton, who was hired as the Broncos' new general manager last month, had promised the "tough decisions'' on some players' futures would begin after he met with the team's scouting and pro personnel staffs as well as the coaches. Among the decisions to be made are option years in the contracts of linebacker Von Miller and safety Kareem Jackson as well as the near-term future of quarterback Drew Lock in the team's offense.
The Broncos sent a fourth-round draft pick to the Jacksonville Jaguars last March in exchange for Bouye. At the time, the Broncos hoped Bouye and Callahan would give them a veteran set of cornerbacks to help their defense in pursuit of the Kansas City Chiefs in the AFC West.
However, Bouye's play was uneven as he missed four games with a shoulder injury as well as another game in the concussion protocol before he missed the final four games with the suspension.
He finished with 21 tackles and no interceptions in seven games.
At the time of his suspension, coach Vic Fangio said: "I was disappointed for him. Players have to make really, really good judgments with the people they trust with their career and with their finances. Obviously something went wrong with this person he dealt with and trusted. It's a disappointing situation for everybody.''
Bouye, an eight-year veteran, has 14 interceptions, 72 passes defended and 338 tackles in his career.