The former Sunderland forward joined Rangers on a one-year deal in August 2012 after being released by Hearts and having brief trials with St Johnstone and Dunfermline.
He went on to make eight appearances for Rangers and scored three goals but has now been released after struggling with injuries.
"Kevin has left the club by mutual consent," McCoist said. "We have terminated his contract and he goes with our best wishes for the future.
"He got an injury at a very bad time because he got back in the team and scored one or two goals, then got an injury up at Montrose.
"I sat down and explained to Kevin that next season the club is going in a different direction and I thanked him for his services."
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