After impressing for Roberto Donadoni's side last season, Biabiany has only made one appearance this campaign after a heart problem was detected.
He was set to move to Milan in September until Cristian Zaccardo refused to go in the opposite direction, but during his medical an arrhythmia was found with Biabiany's heart.
The 26-year-old has not featured since due to medical concerns and now the two parties have agreed to end his contract at the beleaguered club.
"Jonathan Biabiany and Parma have consensually resolved his contract that would have tied him to the club until June 2018," a club statement read.
Parma – who have been declared bankrupt after failing to pay players since July – also revealed the player had foregone any wage payments owed to him, lifting some of the pressure on Serie A's bottom club.
