Hoetzel appeared in 31 games last season. He averaged 2.4 points and 1.3 rebounds in 7.7 minutes per game.
The 6'8'', 220-pound forward will have three years of eligibility remaining upon joining another program.
"We were always impressed with Max’s upside and potential but unfortunately in his view it did not turn into the extended minutes he wanted," Crean said. "He would like to find a clear cut opportunity to play more and we hope he finds that. He is a hard worker who we hope will fulfill his potential and have the chance to play closer to his family."
Earlier this week, Indiana announced that guard Stanford Robinson also has requested a release to transfer away from the program.