Miami is also releasing LT Branden Albert and DT Earl Mitchell on Thursday, as they clear some cap space ahead of free agency.
In total, the Dolphins have cleared $20.165 million of cap room today.
Williams, 31, is a former No. 1 overall pick of the Texans back in 2006. He spent six years in Houston before signing a massive contract with the Bills in 2012.
After four years in Buffalo, the Dolphins signed him to a two-year, $17 million contract that included $4.85 million guaranteed last March. He was set to make a base salary of $8.45 million for the 2017 season.
According to OverTheCap.com, releasing Williams will free up $8.5 million in available cap space while creating $2 million in dead money.
In 2016, Williams appeared in 13 games for the Dolphins and recorded 13 tackles, 1.5 sacks and a pass defense. Pro Football Focus has him rated as the No. 63 edge defender out of 113 qualifying players.