Ian Rapoport of NFL Network first reported the news, noting it was more of a financial decision than anything to do with his play on the field.
Per Spotrac, releasing Iloka saves the Bengals $5.3 million in the cap, although there is also now $1.2 million in dead cap that cannot be used in 2018 and $900,000 in 2019.
The 28-year-old initially signed a five-year, $30 million deal before the 2016 season and could have made $6.6 million in each of the next two years if he remained on the roster.
On the field, Iloka has been an impact player since his second year in the league. He started all 76 games he played over the past five years, only missing four games in 2015.
He has grabbed nine interceptions in this stretch, and in 2017, he ranked third on the team with 80 tackles, five behind leaders Darqueze Dennard and Vincent Rey.
The release will cost Iloka his immediate salary, but there is enough time before the start of the season for him to find a new landing spot.
Meanwhile, this could provide an opportunity for rookie second-round pick Jessie Bates to earn more playing time for the Bengals at safety.