The decision makes Dort a restricted free agent and allows the two sides to negotiate a new deal, Charania added.
Dort has made steady progress since signing with OKC as an undrafted free agent in 2019.
The 23-year-old averaged career highs in points (17.2), rebounds (4.2) and three-pointers (2.5) during the 2021-22 campaign, but his season came to a premature end in February because of a shoulder injury.
Despite Dort's continued improvement, his offensive efficiency remains a concern as he knocked down just 40.4 percent of his shots, including 33.2 percent of his threes, across 51 appearances. He did convert on 84.3 percent of his free-throw attempts, though.
In April, the Arizona State product explained he was focused on his recovery from the injury and not a potential contract extension with the Thunder, saying his agent would handle those discussions.
"It's healing. It's getting better. ... I still got about two, three months before being back at 100 percent," Dort told reporters. "I'm really taking my time with that."
The Montreal native did say he felt Oklahoma City was in position to make a major leap next season.
"We're going to be a team that shocks people," Dort said.
The Thunder's decision to decline the team option is an even bigger shock. Between his gradual improvement and team-friendly salary for next season, it seemed like a virtual lock the front office would keep him for another year while working on a long-term extension.
Instead, the 6'3" Dort will head into free agency and should emerge as a highly coveted target on the open market. He could fit either as a secondary contributor on a championship contender or another high-upside building block for a team looking toward the future.