Gordon had exercised his part of the option but was allowed to go free Saturday. He will receive a $4 million buyout, completing a $72 million, four-year contract he agreed to in January 2016.
A three-time All-Star and seven-time Gold Glove winner, Gordon helped the Royals win the 2015 World Series for their first title since 1985.
He batted .266 this year with 13 homers and 76 RBIs for the rebuilding Royals, who topped 100 losses for the second straight season. Gordon is a career .258 hitter with 186 homers and 738 RBIs.