Carter becomes the second Docker in as many days to leave the club, with forward Cam McCarthy departing in favour of playing in the WAFL.
The 20-year-old was handed five-game suspension by the Dockers after being caught drink driving.
Carter soon learnt he was not going to be offered a contract extension for the 2021 season and requested the club end his current contract prematurely.
Fremantle general manager of football Peter Bell said Carter and his management were seeking clarification around his future with the Dockers.
“Following Jason’s five-game suspension, Jason and his management sought clarity around Jason’s likely contractual status for 2021,” Bell said.
“The club informed Jason and his management that Jason would not be offered a contract for 2021 and subsequently an early release from his 2020 playing contract was agreed to.
“In the meantime, the club will continue to provide ongoing welfare support for Jason, in conjunction with the AFL Players’ Association.
“We take this opportunity to thank Jason for his time at Fremantle and wish him all the best for the next phase of his career.”
Carter was sanctioned earlier in the season after holding a house party with teammates and was fined $3,000.
Carter played just two games for the Dockers, featuring for the purple late into the 2019 season.