Toure, who was released by City after a limited role last season, chose to join the Piraeus club where he won the domestic double in the 2005-06 season.
Yet the 35-year-old's second spell ended after just five appearances, with two coming in the league.
"Yaya is and remains an important member of the Olympiakos family, who has marked a central part of the history of the club," Olympiakos said in a statement.
"Olympiakos would like to thank him for everything he has offered to the club.
"Yaya will remain deeply devoted to the club and wishes to Olympiakos lots of success. Yaya is leaving as a friend and the doors at Olympiakos will always be open for him."
Toure joined Barcelona in 2007 and won two La Liga titles and the Champions League in 2009.
He moved to City in 2010, where he won three Premier League titles, two League Cups and the FA Cup.
(Reporting by Hardik Vyas in Bengaluru; Editing by Toby Davis)
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