Okuonghae, the U’s longest-serving player after joining the club in the summer of 2009, has reached the end of his current deal and has been told his stay in Essex will not be extended.
The 29-year-old made 218 appearances for Colchester and manager Tony Humes said: “Magnus has been an excellent servant to the club and has been club captain.
“It was a difficult decision to let him go, especially with the serious injury he sustained, but with the direction in which the club are going, it was felt that it would be in both parties’ interests for Magnus to seek his football future elsewhere.
“As a player and a person, he served the club well and we wish him all the best wherever he goes next.”
Having helped steer Colchester to League One survival in the two previous campaigns, Okuonghae also was selected as club captain by then-manager Joe Dunne at the start of the 2014/15 season.
However, he endured a tough campaign, playing just 11 times before sustaining a ruptured Achilles against Coventry that ruled him out for the season.
Reacting to his release, Okuonghae said: “I must say thanks for all the support over the years. Colchester will always have a big place in my heart as it has played such a big part in my life.
“I wish them every success in the future.”