"The manager informed me after our testimonial match on Tuesday that the club would not be offering me a new contract," Owen wrote on his Twitter page on Thursday.
"I have loved every minute of the three years I have spent at such a fantastic club. I would like to thank the players, staff and fans for their support and wish them well for the future. I now plan to have a short holiday during which I will contemplate my next move."
The 32-year-old former Liverpool, Real Madrid and Newcastle United striker last played in a competitive Manchester United game in November.
He signed from Newcastle on a free transfer in 2009 and went on to score 17 goals in 52 appearances, winning the 2011 Premier League title - his first English championship medal.
His most notable United strike was an injury-time winner in the Manchester derby three years ago but City got the upper hand this term as they pipped their rivals to the title.
Owen will hope to win a move to another Premier League team but faces a tough ask in resurrecting his once glittering career in which he was named 2001 European player of the year.
‘I don’t think Liverpool would look at Ollie Watkins, a striker isn’t a pressing issue for them – it’s Arsenal who need one’ Former Reds star explains why his old club don’t need an out-and-out forward this summer
‘He’ll still be playing at 40 at a good level because he’s in such good shape and looks after himself so well. He does everything to be a top professional’: Ex-Liverpool coach insists Mohamed Salah has plenty more miles in the tank
