James had until 11:59 p.m. ET Friday to inform the Cavs of his intentions before the option expired.
Free agency begins at 12:01 a.m. ET Sunday, and the balance of power in the NBA could shift if James chooses to leave Cleveland and create a new superteam with the Los Angeles Lakers or join a burgeoning power such as the Houston Rockets or Philadelphia 76ers. Free agents can't sign contracts until July 6.
James has bolted as a free agent twice -- in 2010, when his contract was up with Cleveland and he chose the Miami Heat, and in 2014, when he exercised the early termination option in his Heat contract and returned to Cleveland. He also opted out of his contract with the Cavs in 2015 to sign a new "one-plus-one" deal, and then opted out of his contract again in 2016 to sign a new deal with two years guaranteed and a player option for the third year.
That third season -- worth $35.6 million for 2018-19 -- is the option that James declined.
According to ESPN front-office insider Bobby Marks, Cleveland can offer James a more lucrative deal than any other team -- a five-year max contract in the neighborhood of $205 million. Any other suitor can offer a four-year pact worth $152 million.
Should James re-sign with a shortened one-plus-one deal in Cleveland -- in order to give himself the chance to explore free agency again in the summer of 2019 -- his compensation for 2018-19 would be $35.4 million, and 2019-20 would jump to $38.2 million as the option year.
James, 33, is coming off one of his finest campaigns as a pro in his 15th season. He played all 82 games for the first time and averaged 27.5 points (his most since 2009-10), tied a career high with 8.6 rebounds per game and set a career high with 9.1 assists per game while shooting 54.2 percent from the field.
He followed that up in the playoffs by averaging 34 points, 9.1 rebounds and 9 assists while shooting 53.9 percent. The Cavs advanced to the NBA Finals for the fourth consecutive season and were swept by the Golden State Warriors.
James finished second in MVP voting, amassing 738 points, behind only first-time winner James Harden of the Rockets (965).
In the days that have led up to James' opt-out decision, the Lakers have jockeyed for position in the race to obtain the three-time champion by ramping up trade talks with the San Antonio Spurs to acquire all-NBA forward Kawhi Leonard, as reported by ESPN's Adrian Wojnarowski.
While winning the Leonard sweepstakes would surely cost L.A. several of its young players and draft-pick assets, it would guarantee James a legitimate superstar running mate and would not affect the Lakers' ability to offer James a max deal.
The Sixers also have made an offer for Leonard, league sources told ESPN, and would only have to make a few minor roster adjustments in order to free up the cap space to offer James a max deal.
James is currently on vacation with his family in Anguilla, and it is unclear whether he will return in time to take personal meetings with potential suitors this weekend or if he will allow his representatives, led by agents Rich Paul and Mark Termini of Klutch Sports, to run those meetings in his absence.
Even if James is involved in the meetings, he has no interest in hearing elaborate pitches from teams, ESPN reported this week. That represents a muted approach from the public courtship he took part in with a handful of teams in 2010.
Following the Cavs' Game 4 loss in the Finals, James articulated what factors he will weigh with regard to his future.
"The one thing that I've always done is considered, obviously, my family," James said. "Understanding especially where my boys are at this point in their age. They were a lot younger the last time I made a decision like this four years ago. I've got a teenage boy, a preteen and a little girl that wasn't around as well. So sitting down and considering everything, my family is a huge part of whatever I'll decide to do in my career, and it will continue to be that."