The Samoa international agreed a 12-month deal with the Bulls in October but returned home to Australia before the year was out after suffering a pectoral injury in a World Cup game with New Zealand.
Winterstein, 27, had treatment for the injury in Australia and, after also getting married, has opted to stay Down Under, with Bradford giving their consent.
He is now expected to take up a deal in rugby union and, considering the ongoing off-the-field uncertainties at Bradford, coach Francis Cummins understands his decision.
"Him and his wife have just got married and I guess, for a player who has in the past witnessed financial difficulties at other clubs, the uncertainty wasn't great for him," he said.
"If an opportunity has arose elsewhere for him then we cannot really stand in his way, given the fact we are attempting to make cuts to our playing budget."
Bradford made redundancies at the end of last year in a bid to balance their books, with the club's boardroom situation still unclear as the proposed takeover from Omar Khan to a consortium comprising of Mark Moore, Andrew Calvert and Ian Watt rumbles on.
The latter trio last week returned to the club having stood down on Christmas Eve citing difficulties with the process.