The Giants announced the move on Wednesday, a day after releasing veteran defensive lineman Mathias Kiwanuka. The two moves will save the team just under $6 million in salary cap space.
A seven-year veteran, Hillis' contract was worth $945,000 against the cap this season. He joined the Giants in October 2013 after David Wilson suffered a season-ending neck injury. He played in the Giants' first nine games in 2014 before suffering a season-ending concussion. He rushed for 115 yards and caught 10 passes.
Hillis has also played for Denver, Cleveland and Kansas City.