He has been released by the Bundesliga outfit after going AWOL during pre-season.
The 20-year-old failed to report for training for several weeks after reportedly claiming he had lost his passport during a return visit to England.
Wolfsburg says Hinds' "unauthorised absence" constitutes a breach of his contract and have cancelled his deal.
"VfL Wolfsburg has parted with Kaylen Hinds. The club has reacted to the forward's unauthorised absence of several weeks by terminating his contract with immediate effect," the club said in a statement on Thursday.
"There is no longer a valid contract of employment between Hinds and VfL."
Managing director for sport Jorg Schmadtke said: "Despite repeated requests, he has not fulfilled his contractual obligations. We do not tolerate such behaviour."
The Englishman came through the ranks at the Emirates but failed to break into the senior squad before being sent out on loan to Stevenage.
Hinds then joined Wolfsburg from the Gunners last year but only managed to make one Bundesliga appearance, playing the full 90 minutes in the 3-0 loss to Borussia Dortmund on the opening day of the 2017-18 campaign.
The England youth international spent the second half of last season on loan with Greuther Furth in the second tier, without playing for the senior team.
His future in the game is now very much in doubt after this latest news, which is a shame given his considerable talent.
However, if Hinds can improve his overall attitude and rediscover his enthusiasm for the game, it is still highly likely that another club will be willing to take a gamble on the striker in the coming months.