The England centre, 29, only joined the Australian side in June and was contracted until the end of 2021.
But the Rhinos legend, who won three Grand Finals and two Challenge Cups with Leeds, leaves having made just eighth NRL appearances.
Watkins featured with the Titans earlier this season before the sport was halted due to Covid-19 and there was encouraging signs that he was getting back to his best after the knee reconstruction that ruined his 2018 campaign.
But with family issues back home, including his father's illness, the NRL club granted his request for an immediate release.
Titans coach Justin Holbrook said: “Kallum has only been here for a short time, but he is an immensely popular guy in the playing group.
"Every day he exhibited the qualities that the Club wanted from him – namely his leadership and his professionalism.
“I am mostly just bitterly disappointed for Kallum – firstly that he has to endure this awful situation with health concerns with family members, and secondly that he has had to walk away from his dream of proving himself in the NRL.
“He worked incredibly hard in the off-season, and that hard work was evident in the form we saw from him at the start of the season – in the trial against the Broncos, and then our two premiership games against Canberra and Parramatta.
“For him to have to walk away now just as he was getting back to his best is devastating for him, and for us as his friends.
“But family always comes first, and we would never stand in Kallum’s way of doing what is best for his family in a very difficult time.
“He leaves the Titans with our thanks and best wishes, for him and his family.”
Watkins has played 25 Tests for England, including the 2017 World Cup final, and more than 250 games for the Rhinos.
Ordinarily, there would be a number of clubs chasing his services but, in the current climate with Super League players on furlough and handed pay-cut proposals this week, it remains uncertain where the talented three-quarter will end up.