General manager Dieter Hoeness revealed the decision on Sunday after a disappointing spell in Germany for the player.
Luizao had failed to nail down a first team berth at the Olympic Stadium after arriving in the German capital from Porto Allegre, having just won the 2002 World Cup with Brazil in the Far East.
He had been out of favour after returning from injury this season and had publicly expressed his desire for a move despite being contracted until 2006.
The news will come as a financial relief to Hertha, as they continue their fight against relegation and Hoeness was most critical of the South American's spell at the club.
"He has sacrificed a lot of money that he could have been pocketed over the years," Hoeness revealed.
