Manning, 35, missed the entire 2011 NFL season after neck surgery last September and was due a $28 million bonus if the club had decided to keep him.
“We’re here to announce the conclusion of Peyton’s playing career with the Colts,” team owner Jim Irsay said during an emotional news conference at the Colts’ practice facility in Indianapolis.
“We’re here very much as well to honor all the incredible memories and incredible things that he’s done for the franchise.”
Manning, who turned the Colts into a perennial contender and broke all of the franchise’s major career passing records, also struggled to choke back tears.
“I have been a Colt for almost all of my adult life, but I guess in life and in sports we all know that nothing lasts forever,” said Manning.
“I haven’t thought yet about where I’ll play but I have thought a lot about where I’ve been, and I’ve truly been blessed to play here an blessed to be in the NFL.”
Doctors have cleared Manning, who broke all of the team’s major career quarterbacking records and never missed a start before last season, to resume his career.
Manning, who will become perhaps the most sought after free agent ever in the NFL, stressed how much playing for the Colts had meant to him, but said he was eager to get back to playing.
“I’m throwing it pretty well,” he said. “I still have some progress to make, but I’ve been working pretty hard. I’m enjoying being back out there.
“Nobody loves playing quarterback more than I do.”
Irsay said severing ties with Manning was extremely difficult but that circumstances conspired to make a parting of the ways something that made sense to both parties since the Colts were in the early stages of a rebuilding process.
Following the season, the Colts set the stage for launching a new era by firing Vice Chairman Bill Polian, General Manager Chris Polian and head coach Jim Caldwell.
The Colts, who had a league-worst 2-14 record during Manning’s absence, have the No. 1 overall pick in April’s NFL draft, where Stanford quarterback Andrew Luck is widely pegged as the top choice.
Manning led Indianapolis to the playoffs 11 times, won two AFC championships and was named Super Bowl MVP in the Colts’ victory over the Chicago Bears in 2007.
