The 30-year-old's future had been the subject of speculation since his return to the Tshwane giants in July following the expiry of his loan deal with SuperSport United.
Lebese fell out of favour at Sundowns, failing to make any of Pitso Mosimane's matchday squads this season.
Upon his return to the Chloorkop-based side, he was ignored by the technical team as he was not part of the club's plans.
Players such as Gaston Sirino and Themba Zwane were preferred ahead of him by Mosimane.
Some expected Lebese to secure a move away from the Brazilians before Monday's PSL transfer deadline day.
However, reports emerged closer to the closing of the transfer window that Sundowns had terminated his contract by mutual consent - something the club has since confirmed.
"Jeremy Brockie last night joined Maritzburg United on a season-long loan, while Mamelodi Sundowns can confirm that George Lebese has been released," reads a statement on the Sundowns website.
"Lebese also returned from a short loan stint at our Tshwane rivals SuperSport United, but he, too, struggled for minutes on the field during his spell with the Brazilians. The club and the player agreed to part ways yesterday," said the club.
This makes him a free agent, meaning he is eligible to sign with a team of his choice outside the transfer window.
The Mamelodi-born player is already linked with a possible move to either Stellenbosch FC or Highlands Park although none of the reports has been confirmed.
Lebese scored twice in 10 appearances in the league for Sundowns after joining the club from Chiefs in 2017.
Meanwhile, Sibusiso Kumalo is also leaving Sundowns after close to four seasons with the club.
The former Moroka Swallows midfielder spent last season on loan at Bidvest Wits before Sundowns recalled him at the start of the season.
"Another player who is also leaving Chloorkop is midfielder Sibusiso Kumalo, a player who spent the previous season out on loan at Bidvest Wits," said the statement.