Wakaso had joined the Super League side on a three-year-deal in the summer of 2016 but cut his stay short.
After growing frustrated with the club’s financial troubles, he requested a loan move to Granada in the Primera Division in January where, despite the side's relegation, he excelled and managed to attached interest from several clubs across Europe.
The 26-year-old allegedly demanded the club to terminate his contract and the Greens have confirmed reaching a compromise via a statement.
“Panathinaikos FC announces the termination of its contract with Mubarak Wakaso," said the statement.
"The Ghana international played 16 games in all competitions and scored once from summer to December 2016.
"We wish him success in his career."
Wakaso is not short of suitors however as he has been linked with several sides in Spain, Turkey and England.