He still had a year to run on his deal at KCOM Stadium but head coach Brett Hodgson has been looking for new recruits for 2022 and, to do that, needs to move players out.
After joining from Melbourne Storm, Fonua scored 31 tries in 58 games for Hull during his first stint with the club in 2016 and 2017, helping them win the Challenge Cup at Wembley in both seasons.
He returned to the NRL with Wests Tigers but was brought back to the Airlie Birds by then coach Lee Radford for the 2020 campaign.
But Fonua, 28, has struggled to recapture his best form and has not always been selected by Hodgson who took charge this season.
He is likely to rejoin Radford who has taken over at Castleford Tigers for 2022 and has already brought in winger Bureta Faraimo from Hull as well as ex-FC loose forward Joe Westerman from Wakefield Trinity.
A Hull statement read: "Hull FC have today agreed a financial settlement with Mahe Fonua, which will result in the immediate release of his registration from the club.
"The club would like to wish him luck in the next stage of his career."