Per ESPN's Bobby Marks, the Rockets had until Wednesday to make a decision on Chriss' $4.1 million option.
Chriss, 21, will now be eligible for free agency following the 2018-19 season. He is making $3.2 million this season.
Houston acquired Chriss, the No. 8 overall pick in the 2016 draft, and Brandon Knight from the Phoenix Suns at the end of August in exchange for forward Ryan Anderson. A sprained ankle kept him out of the Rockets' first five games, but he made his debut against the Portland Trail Blazers on Tuesday, recording four points, two rebounds and one block in eight minutes.
Chriss has struggled to live up the expectations of a top-10 pick. He averaged 8.5 points and 4.8 rebounds during his two seasons in Phoenix.
He also missed a six-game stretch during the middle of the 2017-18 season due to a hip injury.
Now that he is healthy, Chriss will try to fit into Mike D'Antoni's system. The Rockets (1-5) have struggled out of the gate, but if Chriss can prove he is worthy of a spot in the rotation, he can earn minutes as well as get the attention of every other team as he approaches free agency.