Sale Sharks have released Australian centre James O'Connor from his three-year contract with immediate effect, the club announced Tuesday.
O'Connor, 28, has signed a contract with Rugby Australia which boosts his chances of representing the national team in this year's World Cup in Japan.
The centre has spent the past two seasons at Sale Sharks since moving from Toulon and made a total of 31 appearances.
"James returns to Australia with the Clubs full blessing, he is an exceptional talent and we will be sorry to see him go, but he has a dream to play for his country again and I will never block anybody's opportunity to do that, especially at a World Cup," said Sale Sharks Director of Rugby Steve Diamond in a statement.
"I would like to thank James for his commitment and contribution to the vision at Sale Sharks and wish him well in the future. I look forward to seeing him progress further in his career, both on and off the field."
The former Force and Rebels star last featured in Australian rugby in 2015 when he returned to the Reds in a bid to be selected for the World Cup but after a season blighted by injury and poor form, O'Connor was overlooked for the Wallabies squad and headed back to Europe.
O'Connor, who has 44 international caps, last represented his country in 2013, before a number of off-field incidents cut his international career short. He is yet to represent Australia since Cheika has been in charge.
"I have nothing but positive words to say about my experience at Sale Sharks," O'Connor said. "They took me in and gave me an opportunity at a time in my life when I needed support and needed a chance to right my wrongs.
"It has been an honour to represent the club until the very end and I would again like to thank Dimes and everyone involved in my ongoing journey. The club is in a fantastic position and have made some great additions to the squad over the summer and I wish the Sharks every success for the future."
Former Wallabies teammate Will Genia welcomed the prospect of O'Connor returning to Australian rugby.
He told local media: "What people tend to do is typecast him as the arrogant kid who did this and that and judgement is clouded on who he might be now as a person.
"If the research is done and he has matured, as the indications are, why wouldn't you bring back someone as good as he is, whether it's into the Reds or the Wallabies set-up?"
Information from Reuters was used in this report.