The 38-year-old English midfielder was signed by the North American league expansion squad in 2014 and scored 15 goals in 31 appearances.
He netted the team's first-ever hat trick against the Colorado Rapids and helped NYCFC reach the playoffs for the first time.
"As my time at NYCFC comes to an end, I would like to thank so many people for the kindness and support that they have shown me over the last two years," Lampard told the team's website.
"My teammates have been a pleasure to play alongside. The amazing fans have given me incredible support and backing. I have very much enjoyed my time and I'm very grateful to have had the opportunity to play for such a great club and in such an incredible city."
Lampard began his career in 1995 at West Ham United, the club for which his father had played, and in 2001 moved to rival Chelsea, where he played for 13 seasons and became the all-time goal scoring leader with 211.
He wound up at New York City FC's owners, Manchester City, in the 2014-2015 English Premier League campaign before joining the MLS side last year.
"Everybody talks about Frank's goal-scoring record from midfield but I can tell you after a year of working with him, he brings so much more to a team than just goals," said NYC FC coach Patrick Vieira.
"What Frank has brought to the locker room is something just as important -- his experience, his elite mentality and his mentorship for the younger members of our squad have helped us greatly this year."
NYC went 15-10 with nine drawn this year in their only full season with Lampard, second in the Eastern Division by only three points to the rival New York Red Bulls. Toronto ousted Lampard's side without a goal in the opening round of the MLS playoffs.
"It is clear that Frank has embraced playing in this league and for this club. I am grateful for his service in my first year here and I wish him the very best in whatever he chooses to do next."
"On and off the pitch he has been a fantastic ambassador," said NYCFC sporting director Claudio Reyna.
"I would tell any young player to watch Frank, to see how he has conducted himself over the last two years and to use that as inspiration as to how an elite, professional footballer should approach the game."
No clues to Lampard's future were given in his release announcement, but it was clear he did make a difference for a fledgling football club making a start in America's biggest sports market and playing in iconic baseball ground Yankee Stadium.
Lampard, paired with Italian Andrea Pirlo in the NYC lineup, scored 29 goals in 106 caps for England before retiring from international football in 2014.