The 29-year-old was due $16.9 million in salary and bonus payments this year on a deal that was reworked last year.
Kaepernick will become a free agent starting March 9, representatives Jeff Nalley and Sean Kiernan told all 32 NFL clubs, according to NFL television network and website reports.
Kaepernick, 29, was due $16.9 million in salary and bonus payments this year on a deal that was reworked last year and originally meant to keep him with the team through 2020.
Kneeling rather than standing during "The Star-Spangled Banner" throughout the season as a way of protesting racial inequality brought Kaepernick complaints and support.
On the field, he began the season as a reserve to Blaine Gabbert before returning to the starter's role on October 16 against Buffalo.
The 49ers promptly lost nine games in a row and 10 of 11 overall to finish the season with the NFL's second-worst record at 2-14.
Kaepernick could still return to the 49ers next season, having met last week with new 49ers coach Kyle Shanahan and new general manager John Lynch.
"I would characterize it as just a really positive discussion," Lynch said.
"The evaluation process is still very much fluid. We've only been on the job a couple of weeks, and I can tell you we both very much enjoyed being around Colin, and he seems like he's in a real good place."
NFL general managers and coaches are expected to have more spending money than they did a year ago, with the NFL Network reporting Wednesday the salary cap for each club for the 2017 campaign will be $167 million, a $12 million jump over last year and a $47 million rise from 2012.