Chairman Darragh MacAnthony confirmed that Little would not stay at the club during a Q&A with supporters on Twitter.
The 24-year-old, whose contract runs out in June, was transfer listed by Posh in 2012 but remained at London Road and went on to make 43 appearances last season as Darren Ferguson's men were relegated to League One.
MacAnthony wrote: "Little turned down new deal so we move on. We have two great right-backs anyway!"
Meanwhile, the Posh chief expects midfielder Grant McCann, who netted eight times last season, to sign a new contract at the club.
"Grant talks went great & should be resolved soon enough," he added.
Little made 134 appearances for United after joining from Wolves in 2010.