The 38-year-old central defender won Euro 2016 with Portugal this summer, but Monaco are rebuilding and have decided against prolonging his three-year stay there.
“Concerning Ricardo Carvalho, we have had talks and agreed there will be no contract extension,” the club’s vice-president Vadim Vasilyev said.
“He’s been huge for us but the time has come to move on”.
Monaco have signed three defenders over the summer in Polish international central defender Kamil Glik, up-and-coming left-back Benjamin Mendy, 21, from Marseille, and pipped Arsenal to the signature of Lille’s Djibril Sidibe.
Carvalho came to prominence at Porto where he won the 2003 UEFA Cup and the 2004 Champions League under Jose Mourinho, who he then followed to Chelsea and later to Real Madrid.