The Jets notified Tebow of their decision to waive him after just one season at a voluntary team workout on Monday morning.
"We have a great deal of respect for Tim Tebow," Jets' head coach Rex Ryan said in a statement. "Unfortunately, things did not work out the way we all had hoped.
"Tim is an extremely hard worker, evident by the shape he came back in this offseason. We wish him the best moving forward."
The decision to release Tebow came just two days after the Jets acquired West Virginia University quarterback Geno Smith at the 78th annual NFL Draft.
The Jets already had five quarterbacks, including former first-round draft pick Mark Sanchez, who struggled so badly last season that he lost his starting spot, prompting speculation that someone had to go.
It was little surprise that it was Tebow, who won the Heisman Trophy as most outstanding US college football player in 2007, that got the chop.
His tenure with the Jets was brief and hugely unsuccessful, both for him and the team. One New York newspaper described it as a circus.
Tebow, a devout Christian whose public displays of religiosity polarized public opinion, did not make any public comment about his axing but did post a Bible verse on his Twitter account.
"Proverbs 3:5-6: Trust in the Lord with all your heart and do not lean on your own understanding...in all your ways acknowledge Him, and He will make your paths straight," he tweeted.
Tebow had previously been with Denver, taking the Broncos on an improbable run to the 2011 play-offs, despite criticism and reservations about his ability as a passer.
He had quickly become a cult figure. Deeply religious and with a clean-cut image, he became a magnet for sponsors, signing a range of massive endorsement deals, which earned him an estimated $4 million a year.
His jerseys were among the biggest sellers in the NFL and his trademark touchdown celebration, where he kneeled down in prayer, became known as "Tebowing."
In early 2012, the Broncos signed future Hall of Fame quarterback Peyton Manning after he had become a free agent, and traded Tebow to the Jets.
The Jets said they planned to use Tebow on special teams and 'wildcat' plays, as a complement to Sanchez, but the experiment failed and Tebow-Mania never quite took off in the New York.
Tebow, 25, spent most of each game stuck on the bench and the Jets, who missed the play-offs, were ridiculed for acquiring him and not playing him when Sanchez struggled.
Tebow's immediate future remains uncertain. Most NFL pundits said he was unlikely to be claimed in the short term because of his high salary, but once he clears waivers, he would be able to sign with any team as a free agent.
He had previously linked with the Jacksonville Jaguars, his hometown team, but the Jaguars had ruled that out. Other teams have said they might interested in him, in a different position from quarterback.
Another option could be the Canadian Football League, although he would not be guaranteed a starting spot there either.
"If he wants to come to Canada he would be in the same situation as the one he was in with New York," Jim Popp, the general manager of the CFL's Montreal Alouettes, told TSN.
Financially, Tebow's future looks secure. Of his five corporate sponsors, three did not immediately respond to requests for comment, and two said they were undeterred by the quarterback's departure from the Jets.
"[The deal] is not based solely on football and Tim exceeds his status as a football player," said Steve Wymer, a spokesperson for TiVo.
"Hopefully he'll have a better season this coming year than he did last year, since this clearly this has been a crazy season with the NY Jets."
Lan Kennedy-Davis, the chief executive of SOUL electronics, said her company was "100 per cent behind Tim Tebow regardless of his team."
"We support Tim, we like Tim, and he's our ambassador because he stands for greatness - not just in football but in what he does in his life," she said.
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