McStay has been closely linked with a switch to the Magpies this season, putting contract talks on hold throughout the year.
A rumoured five-year, $3 million has been flagged for the Victorian spearhead, who now looks certain to return to his home state.
While the Lions did not state McStay has chosen a new club, the club confirmed on Friday afternoon that his tenure in Queensland will come to an end.
“Dan has been a great teammate in his time with the Lions and remained committed to our cause until the end," Brisbane football boss Danny Daly said in a club statement.
“He stuck with the Club during many lean seasons and played a vital role in helping the Brisbane Lions play finals football the past four seasons.
“We thank Dan for his service after the last nine years and wish him all the best for his next chapter.”
McStay has played 161 games in nine years with the Lions, booting 138 goals after sharing his time as a defender and forward.
The 27-year-old thanks the club for their support, revealing his plans to move back to Melbourne.
“I’ve had an amazing nine years with great support from both the playing group and staff,” McStay said.
“They have helped me grow both on and off the field and I’m incredibly grateful for the opportunity the Brisbane Lions have given me to fulfill my dreams of playing AFL football.
“Thanks also to all our fans and supporters - what a journey this club has been on, just in my time.
“Together, my partner and I, have decided to move back home to Melbourne. I wish the club every success and will be watching with a keen eye.”
Brisbane will receive draft compensation when McStay joins his next club through free agency, with the range of the draft pick depending on details of the forward's next contract.