"We were unable to reach an agreement with Brian and both sides have decided to move forward," Bears general manager Phil Emery said, according to ESPN.
The 34-year-old Urlacher remains an unrestricted free agent.
The looming split marks the end of a 13-year marriage between the team and defensive icon. Originally drafted in the first round of the 2000 NFL draft, Urlacher has played in eight Pro Bowls and won Defensive Player of the Year in 2005.
According to Vaughn McClure of the Chicago Tribune, the Bears offered Urlacher nothing more than a one-year deal worth up to $2 million, with $1 million guaranteed and the rest available through incentives. Urlacher felt the deal was a "slap in the face," and decided to move on.
However, the Bears' offer raises a very real question: Does Urlacher have anything left?
Chicago made it crystal clear that its view of Urlacher in 2013 and beyond had a set price. When Urlacher didn't take the modest deal, the team appeared more than comfortable moving on.
An examination of several games from 2012 revealed why the Bears were so willing to stand pat on their original offer.
Despite the Chicago defense remaining among the NFL's best, Urlacher has regressed into little more than a role player over the last two seasons. Once a freak athlete capable of shedding blocks and playing sideline to sideline, Urlacher now has to rely on instincts and understanding to make plays.
During a Week 10 loss to the Houston Texans, Urlacher gives us just one example of how his athleticism has eroded in recent years.
On this third-down play, the Texans stretch out running back Arian Foster to the strong side of the formation. Urlacher is battling a reach block from the guard, but he's eventually able to escape and pursue.
However, Urlacher simply doesn't have the necessary movement to get into position and wrap up Foster. He has to attempt a weak arm tackle, and Foster easily breaks it to pick up the first down and more.
Urlacher in his prime would've flowed to the corner and stopped Foster for no gain. Unfortunately, whatever lateral agility he had left was taken when a knee injury struck in 2011. It's hard to tell if he's been 100 percent since.
While Urlacher still makes the occasional play against the run thanks to natural instincts and over 10 years of playing inside linebacker at a high level, his ability to chase down opposing backs has steadily decreased.
His game tape from 2012 shows two worrying trends: missed tackles are up, and impact plays are down. Chicago's Week 4 meeting with the Dallas Cowboys provides us with the perfect model.
On first down, Dallas runs a simple draw play with running back DeMarco Murray. The concept gets Murray into space, but Urlacher isn't fooled. The veteran has put himself into perfect position to make a stop at or behind the line of scrimmage.
Urlacher doesn't make the play. He overruns to the outside, and Murray makes one sharp cut inside to avoid his tackle attempt. A play that should have went for no yards nets the Cowboys eight.
Every middle linebacker in the history of football has missed tackles. But there's little doubting that the mistakes have started to add up for Urlacher last season.
The stats back up the film. According to Pro Football Focus (subscription required), Urlacher missed 10 total tackles in 12 games last season. Nine came against the run, where Urlacher's tackling efficiency rated out as the worst among inside linebackers.
Even if you include his single missed tackle in coverage, Urlacher still finished last season ranked 43rd out of 53 eligible inside linebackers in tackling efficiency.
Teams can handle missed tackles if the player is also consistently making big plays. That wasn't the case for Urlacher.
Urlacher played 251 snaps against the run last season, but he made just 22 total "stops," or tackles PFF considers a defeat for the offense. Urlacher's run-stop percentage ranked just 27th among inside linebackers.
If there's one area Urlacher excelled statistically, coverage would probably be it. His passer rating against was under 75.0 in 2012, and he didn't allow a touchdown.
However, Urlacher looked sluggish dropping into the middle half of Chicago's Cover-2 defense, and one can only assume that his athletic downturn will continue as he enters the upcoming season.
In a different scheme, Urlacher could be a liability when facing more tight ends and running backs in man-to-man coverage.
Most turned up their noses when it was discovered the kind of money Chicago was offering Urlacher—a face of the franchise who has given the Bears over a decade of Hall-of-Fame years at middle linebacker.
But general manager Phil Emery obviously has little time or money for nostalgia, and came to the conclusion that Urlacher is running out of gas. In turn, he offered what he thought was a fair deal.
If Urlacher wants to continue playing in the NFL, he has to forget about money. The kind of deal he wants isn't coming on the open market. NFL teams know that what he offers in instincts and experience is mostly thwarted by a rapidly declining athletic skill set.
And his market is now reflecting that.