Jane Slater of NFL Network reported Olawale's decision.
Olawale, 31, was heading into his third season with the Cowboys. He was slated to make $1.1 million in base salary and will instead receive a $150,000 stipend.
Forty-three players have opted out of the 2020 season thus far over COVID-19 concerns. Olawale is the third Cowboys player to opt out, joining wide receiver Stephen Guidry and cornerback Maurice Canady.
The Cowboys offense won't likely see much change with Olawale out. He's been used as an occasional blocker but was on the field rarely. The biggest difference will come on special teams, where he's been integral on punt and kick coverage.
It's unclear if the Cowboys will sign a fullback to replace Olawale or go without one on their roster in 2020. The position has seen a steep decline in usage and importance over the last decade-plus; there are only 34 total fullbacks under contract across the NFL, many of whom get most of their work on special teams.