The 33-year-old's current deal was due to run until the summer of 2014, but he will now become a free agent on September 2.
King, top goalscorer at St Andrew's for the past two seasons, was told at the end of last season that he was free to talk to other clubs as the Blues bid to trim their wage bill.
A brief statement on the club's official website read: "The club would like to take this opportunity to thank Marlon for his magnificent service to Blues over the last two seasons and wish him well for the next chapter of his career."
King joined Birmingham on a free transfer in June 2011 following his release from Coventry, while his previous clubs include Gillingham, Nottingham Forest, Watford and Wigan, who paid £5million to take the Jamaica international from Vicarage Road in 2008.
His troubles off the field in recent years have overshadowed his exploits on the pitch.
He was arrested in July over an alleged hit and run incident which left a man in hospital and previously spent time in jail for sexual assault and causing actual bodily harm in 2009.