The Israeli attacker, who spent the season on loan at French side Auxerre, has been told that he is surplus to requirements at the Catalan club and will be allowed to leave
The 22-year-old failed to hold down a regular place at the Catalan club since joining from Chelsea in 2009, and has spent the last two seasons on loan at Hapoel Tel Aviv and Auxerre.
"My agent spoke with Espanyol's directors and after that he informed me that they do not want me to remain at the club," Sahar wrote on his Twitter page.
"I am really sorry. I really like this club and its fans. Next week I will know where I will play next."
Sahar, who has 25 Israel caps to his name, made 22 competitive appearances for Auxerre in 2011-12, scoring four goals for the Ligue 1 side.