ESPN's Cameron Wolfe reported the roster move was a "mutual parting."
Stills suffered a quad injury during the Texans' Week 11 win over the New England Patriots and missed Thursday's Thanksgiving Day victory over the Detroit Lions.
The 28-year-old was a fringe contributor for the Houston offense when healthy in 2020. He tallied 11 receptions for 144 yards and one touchdown in 10 appearances.
The University of Oklahoma product recorded 40 catches for 561 yards and four scores in 13 games during his first year with the Texans.
Even with Randall Cobb landing on injured reserve with a toe injury, Stills wouldn't have been more than a depth option down the stretch. Will Fuller V and Brandin Cooks have established themselves as the top targets for quarterback Deshaun Watson.
Being released now will give the former New Orleans Saints and Miami Dolphins receiver a chance to find a team when he'll be more involved in the offensive game plan.
Stills' career numbers stand at 310 catches for 4,843 yards and 37 touchdowns in 117 games since the Saints selected him in the fifth round of the 2013 draft.
The 6'1", 202-pound wideout will first go on waivers, giving teams a chance to claim him while taking on the remainder of the final season of his four-year, $32 million contract. If he clears waivers, he'll be free to sign with any team on a new deal.