James Palmer of NFL Network reported the move will save the Broncos around $10.5 million in cap space.
ESPN's Adam Schefter first reported the news on Thursday morning.
This move comes after The Athletic's Nicki Jhabvala reported Tuesday that the Broncos reached a two-year agreement with ex-Detroit Lions quarterback Jeff Driskel to be their backup. 9News' Mike Klis then reported that the expectation was for Flacco to be released "by end of week" in a corresponding move.
The Broncos traded a fourth-round draft pick in 2019 to acquire the longtime Baltimore Raven in February 2019, yet the move appeared to be a stopgap until rookie Drew Lock was ready to take over the offense.
Flacco started the first eight games of the season while Lock was on injured reserve with a thumb injury and compiled a 2-6 record with 1,822 passing yards, six touchdowns, five interceptions, eight fumbles and a QB Rating of 85.1.
An injury to his neck forced him to the bench and gave Lock an opening to take over. During the final five games of the season, the 23-year-old passed for 1,020 yards, seven touchdowns and three interceptions while going 4-1 and solidifying himself as the future of Denver's offense.
That left Flacco as a backup with a massive contract for the second time in as many years after Lamar Jackson supplanted him in Baltimore.
Flacco signed a three-year extension worth $66.4 million in 2016 that will pay him more than $20 million per year through 2021. That made trading the quarterback difficult.
At 35 years old, it remains to be seen just how intense the market is for his services. He hasn't posted a QB Rating above 90 since 2014, which was also the last time the Super Bowl champion won more than nine games in a season as a starter.
Originally drafted by Baltimore 18th overall out of Delaware in 2008, his career reached a crescendo in 2012 when he led the Ravens to a 34-31 victory over the San Francisco 49ers in Super Bowl XLVII, winning the game's MVP award in the process.