The 35-year-old signed a one-year deal with League One side Coventry in the summer but has managed just 12 appearances, the most recent of which came in late October.
Kilbane started his career at Preston before spells with West Brom, Sunderland, Everton, Wigan and Hull.
He won 110 caps for the Republic of Ireland, behind only Robbie Keane and Shay Given.
Kilbane said: "I would like to thank the directors, coaching staff, players and supporters at Coventry City Football Club for my brief time at the club and wish them all the best for the future."
Coventry development director Steve Waggott said: "Kevin has been a great professional throughout his career and we would like to thank him for his services to the club, and wish him all the very best in whatever he decides to do in the future."