Faty played a total of 30 A-League games for Graham Arnold's side after joining in the 2015 January transfer window.
The centre-back helped the club reach last season’s Grand Final and second place on the A-League ladder with a record number of points and goals.
However, this season proved a different story for Faty and his team as they ended the season in seventh and only have the AFC Champions League to pin their hopes on.
The 32-year-old was also overlooked for coach Graham Arnold's Asian Champions League squad along with fellow import, marquee Filip Holosko.
“Jacques has given great service to the club and played an integral part in our record breaking season last year," Arnold said.
“We thank him for the time he has given to Sydney FC and wish him all the best for the future.”
Faty scored two goals in his career at Allianz Stadium, including the first in the Sky Blues 2-1 Sydney derby win in January and an opening goal in a 3-0 win over Wellington Phoenix last season.
If Arnold's recent selections are anything to go by, Faty's cousin Mickael Tavares could be next on the chopping block.
The midfielder, who joined Sydney with Faty last January, has another year left on his contract but was not even on the bench for the past two matches.
At Allianz Stadium on Sunday, Arnold said he'd decide over the coming weeks what changes would be necessary to rebound from the "unacceptable" campaign.
But he was tight-lipped about which, and how many, players might depart.
"There's players obviously off-contract and on-contract," Arnold said.
"Every team rebuilds - even the team that wins the league will rebuild.
"Whether it's small or big, we need to decide over the next few weeks."