The 32-year-old had a year left on his contract but asked new Easter Road boss Lee Johnson to be released early from his deal in order to play regular first-team football.
He told the Hibs website: “It’s been a tough decision but I am now at an age where the most important thing for me is playing.
“The manager was very understanding and the club made the process very easy for me. Everyone at Hibs has been amazing during my time here and I’ve loved every minute of it.
“I’d like to thank all the Hibernian staff, fans and my teammates for making it such a brilliant experience and making me a real part of the Hibs family."
In the statement, Hibs made a point of saying Mitchell’s departure will create a “clear pathway” for 17-year-old Murray Johnson to be involved more with the first-team.
Hibs recruited former Scotland international David Marshall earlier in the summer. The 37-year-old is expected to start next season with Kevin Dabrowski as his deputy.
Mitchell arrived during the 2021 summer transfer window and leaves without playing a game. He has featured only four times at the top-flight level across a two-year spell with Dundee between 2015 and 2017 in a career mostly spent in the lower leagues.
A popular figure at League Two Stranraer, he’s also played for Ayr United, Falkirk and Clyde.