Orton, 31, missed all of offseason workouts and was subjected to fines totaling close to $70,000 as he considered retirement since the 2013 season ended.
Releasing Orton adds $1.1275 million in dead money in 2014 to the Cowboys' salary cap and $2.255 million in dead money in 2015 to the team's cap.
The move saves the team $3.25 million this season (Orton's base salary).
Orton was 33 of 51 for 398 yards with two touchdowns and two interceptions in last season's finale after Cowboys starter Tony Romo was lost to a back injury.
For his career, Orton has a 35-35 record as a starter, completing 1,326 of 2,265 passes for 15,019 yards with 83 touchdowns and 59 interceptions.
ESPN.com Cowboys reporter Todd Archer contributed to this report.