The Iceland international has parted ways with the Terriers by mutual consent after spending two years at the club, having joined on a free transfer in June 2010.
The Terriers boss told the club's official website: "When I arrived at the club Joey hadn't featured this season, but just like the entire squad he started with a clean slate under me and got his chance to play in the side.
"Joey has received an offer to go back to Iceland to play and after coming to me, I agreed that he could leave. That move back home is motivated by family reasons and that made it a fairly easy decision to agree - particularly as we have a couple of players returning from injury in his position.
"I'm sure I speak for everyone when I thank him for his contribution and wish him the best of luck for the future."