The Ravens created $1.8 million in salary cap room by parting ways with Woodhead, according to Spotrac.
Woodhead rushed 14 times for 56 yards and had 33 catches for 200 yards receiving in eight games last season.
The 33-year-old sustained a hamstring injury on the first drive in the season opener against the Cincinnati Bengals. On that possession, Woodhead had three catches for 33 yards and one carry for four yards before leaving with the injury.
Woodhead signed a three-year, $8.8 million contract with Baltimore prior to last season. He has been limited to 10 games over the past two campaigns.
Alex Collins, who averaged 4.6 yards per carry last season, and Kenneth Dixon are expected to guide the running game for the Ravens. Buck Allen emerged to provide a jolt to the passing game out of the backfield in Woodhead's absence last season.