Having impressed during a loan spell at Portman Road, the former Fulham star, 33, made a permanent switch to Portman Road last summer and penned a two-year deal with the Suffolk club.
But he lost his place in November and subsequently made just seven substitute appearances.
Town boss Paul Jewell said: "I've known Jimmy for a long time. He's a top lad but he wants to play regular first-team football and I can't guarantee him that here."
Bullard said: "I feel as fit as I've ever done and knowing that my opportunities were going to be limited at Ipswich, it's best that I move on."