Sidelined for months and forced to train either alone or with reserves after failing to live up to expectations, Wiese's future at the club had long been in doubt.
Shunned by fans and club officials, the former Germany keeper, who was part of the 2010 World Cup squad, had seen his image take a major hit after leaving Werder Bremen and failing to find any success at Hoffenheim following an error-ridden start to the 2012/13 season.
Hoffenheim said on Wednesday the two parties had finally reached an agreement to dissolve his contract, which ran until 2016, with German media reporting a payment to Wiese of several million euros (£5.8m).
"We are relieved that we succeeded in solving this issue without major problems," said Hoffenheim CEO Peter Rettig, who did not give any financial details of the settlement.
Wiese, who had repeatedly refused to leave despite other offers, has not signed for another club.
"After a difficult period for me and my family I will now look forward and calmly think about my future," said the 32-year-old, who has won six caps for Germany.