Musselman didn't disclose a reason for the dismissal.
"We have set a level of expectations for our student-athletes on and off the court," Musselman said in a statement. "After discussions with Gabe, it was decided that it would be best to part ways. We thank him for his time at Arkansas and wish him well."
Osabuohien, averaged 3.1 points and 3.2 rebounds in 24 games last season in his sophomore year, thanked Musselman, his staff and teammates Thursday on Twitter.
"I would like to thank Coach Mike Anderson and his coaching staff, and Coach Musselman and his coaching staff for allowing me to grow as a young man on and off the court," the tweet said. "I want to thank Razorback Nation for the love and support they've given me since I have been here. Lastly my teammates through the years and brothers for life, thanks for having my back."
The Associated Press contributed to this report.