The 31-year-old was 7-7 with a 3.26 ERA in 18 starts this year, striking out 107 and walking 23 in 113 1-3 innings. His season was cut short by a strained right elbow that caused him to go on the disabled list on July 11.
A two-time All-Star, Buchholz is 73-51 with a 3.85 ERA in nine big league seasons.
Boston, which announced the decision Tuesday, could have opted to pay a $245,000 buyout and allowed him to become a free agent. The Red Sox have a 2017 option for $13.5 million with a $500,000 buyout.