Senior executive John Herrera told The Associated Press the move was made Thursday and that "we wish him well."
The decision comes less than two weeks after Oakland acquired Jason Campbell from Washington to take over at quarterback.
Russell will now likely be considered the biggest draft bust in NFL history. He will have been paid more than $39 million by the Raiders, while producing only seven wins as a starter.
He lost his starting job midway through last season. His career has been hampered by a rookie holdout, poor work habits, being overweight and the lack of productive players around him.