The veteran GK had been offered a new deal at Craven Cottage but decides to seek first-team minutes. Chris Baird, Simon Davies and Giorgos Karagounis were also let go by the club.
The Australia international, who was the first overseas player to make 500 Premier League appearances, was told that his current deal would not be extended with a guarantee of playing first-team football. Following the arrival of Maarten Stekelenburg from Roma in June, the 40-year-old Schwarzer is keen to move on, which Fulham announced on its official website on Monday.
The veteran made 219 appearances during five seasons at Craven Cottage, having joined from Middlesbrough on a free transfer in 2008. Schwarzer had said that he would not decide his future until after Australia's crucial World Cup 2014 qualifier against Iraq in June, which the Socceroos won to reach their third consecutive World Cup.
Hull City is among the clubs reportedly interested in taking him on as he seeks a new source of first-team football.
Schwarzer was not alone on players departing Craven Cottage, as defender Chris Baird, Greek midfielder Giorgos Karagounis and former Wales international Simon Davies were all released. Development squad players Alex Smith, James Musa, Richard Peniket, Tom Donegan and Corey Gameiro have also been shown the door.