The 32-year-old has been limited to five appearances this season since joining the side last summer on a year deal after ending his contract with Hebei China Fortune by mutual agreement.
And on Wednesday, the Stadium Municipal outfit announced the departure of the former Rennes midfielder.
“In agreement with the management of the TFC, Stephane M'Bia decided to terminate his contract with the TFC,” read a statement from the club's website.
“Stephane wishes to thank the TFC for allowing him a return to the French league and wishes the club, its leaders and its supporters a beautiful second half of the season.
“The TFC also salutes Stephane for his commitment, his experience and his professionalism and wishes him the best in the pursuit of his great career.”
Toulouse, four points above the relegation zone, will continue their survival battle in the absence of the midfielder when they take on Lyon on Wednesday evening.