"This decision was one of the hardest I have ever had to make," owner Charles Wang said in a statement. "The organization holds Alexei in the highest regard - as a player, as a teammate and as a person.
"He was part of the revival of the franchise at a time when we had not qualified for the playoffs for eight seasons. All of us at the Islanders wish Alexei nothing but the best as he continues his career."
Yashin, 33, signed an US$87.5-million contract after the Islanders acquired him from Ottawa in 2001. The four years left on the deal are worth US$26.45 million, according to Newsday.
Under the NHL collective bargaining agreement, the Islanders can buy Yashin out by paying two-thirds of the remaining amount ($17.63 million) over the next eight years. The salary-cap hit will be some $2.2 million per season over that time.
"Alexei has always been a professional on and off the ice and this was not something that was easily decided," said head coach Ted Nolan. "I believe this is in the best interests of the team and player in mind. Alexei will have an opportunity to pursue a fresh start and we'll look at options to fill his position."
In his six years and 346 games with the team, Yashin scored 119 goals and added 171 assists. Last season, when he missed 24 games with a knee injury, Yashin had 18 goals and 32 assists in 58 games.
"The Islanders have treated me with the utmost respect," Yashin, a 10-year NHL veteran, said in a statement. "I've always believed in the vision Charles Wang has for the organization and although I won't be a part of it, I believe that the team is headed in the right direction. I'm looking forward to this new chapter in my life."