The 28-year-old midfielder, who joined Milan from Empoli in 2019, has had spells on loan at Olympique de Marseille and Dinamo Zagreb after being sidelined by persistent knee injuries.
"AC Milan can confirm the termination of Ismael Bennacer's contract by mutual consent," the club said in a brief statement on Friday. "The Club would like to wish him all the best for the future."
Bennacer made 137 Serie A appearances for Milan, playing a central role in their 2021/22 Scudetto triumph, but has struggled with fitness issues and last played a competitive match for the Italian side in 2024.