The 33-year-old club legend returned to the Eagles in September on a free transfer after coming to the end of his deal at fellow London club Queens Park Rangers.
He was named in then-manager Neil Warnock’s 25-man Premier League squad but went on to make just one appearance this season – their Capital One Cup defeat to Newcastle in September.
And Johnson, who scored 84 goals in 160 games in his first four-year spell at Palace, is now on the search for a new club after seeing his short-term contract at Selhurst Park expire.
Following his release, the striker said: “It was great to be back at Palace, if only for a short time.
“I wish everyone at the club and those great supporters every success for the rest of the season.”