The 31-year-old, who is not in the latest England squad for the Ashes series against Australia, will go off the Sussex payroll at the end of the season next month and go on loan to a second-tier team until then.
"I am grateful to Sussex for allowing me to be released from my contract for 2014 and 2015 in order to explore other opportunities to further develop my cricket," Panesar said in a statement on Monday.
"I want to give myself the best chance of playing all forms of the game at the highest level."
Panesar has been England's back-up test slow bowler in recent years but Lancashire left-armer Simon Kerrigan was picked alongside main spinner Graeme Swann in the squad for this week's fifth and final Ashes test at the Oval starting on Wednesday.
England lead Australia 3-0 and Panesar, who media reports say has gone through a bitter divorce this year, was a non-playing member of the squad for the drawn third test at Old Trafford at the start of August.
Days later police fined him for being drunk and disorderly after being seen urinating in public near a nightclub in the early hours.
"I have endured a challenging time this year off the field and my frustrations have sometimes got the better of me professionally. I apologise for letting the club, my colleagues and my fans down," he added.
"I believe that if I maintain the bowling progress I have made in recent weeks which enabled me to be selected for the test squad at Old Trafford, I can fulfil my long-held ambition of becoming the best spin bowler in the world, over time."
(Reporting by Mark Meadows. Editing by Patrick Johnston and Tony Jimenez)
