Hali's contract was set to expire after next season and the Chiefs would take a $9.4 million cap hit. Instead, cutting the 12-year veteran will carry a dead cap hit of $1.7 million.
Hali made five straight Pro Bowls from 2011 to 2015 and his 89.5 sacks are second to Derrick Thomas in team history.
Hali dealt with knee issues last season and appeared in a career-low five games, recording one tackle. He began last season on the physically unable to perform list and did not appear in a game until Week 9 against the Dallas Cowboys.
Before last season, Hali had only missed five games, although in 2016 he started just two games after agreeing to a three-year $21 million deal and elected to skip voluntary offseason workouts.
In 177 regular-season games, Hali recorded 453 tackles, 89.5 sacks and 10 interceptions. He reached double digits in sacks in 2010, 2011 and 2013.
Parker sent a pair of farewell messages on his Twitter account after he was released. The first read as follows: "I Would like to thank the Hunt Family and the @kcchiefs for my time in Kansas City. It was great playing in front of the fans in Arrowhead and with some of the best teammates in the @NFL. Now it's time for me to move on. I look forward to this new journey and chapter Ghost38."
Parker's second message was directed at the fans: "I thank the greatest fans in the world ChiefsKingdom for 12 incredible years. I also want to thank the @Chiefs organization for believing in me from the beginning. All the support during my career in Kansas City has been overwhelming and KC will always be special to me."
The Chiefs asked Parker to take a pay cut but he declined. He will become a free agent on Wednesday.
Releasing Parker will save approximately $4.9 million in salary cap space in 2018
Parker, 30, was a starter for the Chiefs each of the past four seasons. He had 67 tackles, four passes defended and two interceptions last season.