The NZ side have allowed one of their best players from last season to move on despite him being in contention to feature in next month's FIFA showcase event
The 32-year-old playmaker was one of the club's most consistent performers last season after being reunited with former Melbourne Victory coach Ernie Merrick at Westpac Stadium.
Hernandez was named in Costa Rica's 30-man training group earlier on Tuesday ahead of their matches against England, Italy and Uruguay in Brazil.
Phoenix acknowledged in December there were issues arising from a delay in bringing their star recruit's family to New Zealand, while the player himself talked openly about the possibility of changing clubs last month.
And it has now been revealed he will not be pulling on a yellow and black shirt again in 2014-15.
"Carlos' family have found it difficult to settle in Wellington," Phoenix general manager David Dome said in a statement.
"It is tough for a player when that is the case and the club agreed to his request for a release.
"We congratulate Carlos on his selection to the Costa Rican team for the World Cup and believe his performances for the Phoenix played a part in that.
"The club wishes Carlos all the best for Brazil and in the future."