The 31-year-old McAlister, who started for Baltimore's Super Bowl winner in 2001, ranks third on the Ravens' career list with 26 interceptions and scored seven touchdowns for Baltimore - including a 107-yard return of a missed field goal.
He started five games last season before being benched and was placed on injured reserve with an injury to his right knee on Nov. 11. McAlister finished the season with three interceptions and 19 tackles.
McAlister was due to make $8 million this year.
"We want to thank Chris for all he did for the Ravens in the past 10 years," general manager Ozzie Newsome said. "He was a major contributor to many big wins, including the Super Bowl."