Fredette would be a free agent if he clears waivers.
Yahoo! Sports first reported the sides were working on a buyout.
Fredette was drafted with the 10th pick in 2011 after a sensational run at BYU, where he won The Associated Press' player of the year award as a senior and led the Cougars to the Sweet 16 of the NCAA tournament for the first time since 1981. He never lived up to the fanfare in Sacramento, though the franchise's instability -- he's played for three head coaches and two ownership groups -- didn't help his cause.
He is averaging 5.9 points and 11.3 minutes per game this season, shooting 47.5 percent from the floor and 49.3 percent from 3-point range. For his career, he is averaging 7.0 points, 1.5 assists and 1.1 rebounds and shooting 41.6 percent, including 40.2 percent on 3-pointers.
His time in Sacramento has been nearing an end since before the season, when the Kings decided not to pick up an option on his contract for 2014-15. Sacramento tried to move Fredette before last week's trade deadline but couldn't get any takers.
Since Sacramento traded Marcus Thornton to Brooklyn for Jason Terry and Reggie Evans last week, coach Michael Malone has said he wanted to use the remainder of the season to give rookie guards Ben McLemore and Ray McCallum more playing time. That move buried Fredette even further on the bench.
Fredette led the nation in scoring with 28.5 points a game as a senior at BYU. Big performances in big games had NBA stars tweeting his name, President Barack Obama mentioning him while filling out his NCAA bracket and college basketball fans in a frenzy.
Hundreds of fans greeted Fredette's arrival at the Sacramento airport after the Kings acquired him in a draft-day trade with Milwaukee. Fans have remained vocal about Fredette, often screaming at games for him to play more and cheering louder for him than other reserves when he does play.
But the same concerns some scouts had about Fredette when he entered the league -- doubts about his defense, ballhandling skills and ability to create his own shot against bigger and more athletic defenders -- persist.
Paul Westphal was the only one of Fredette's three coaches committed to giving him extended minutes. Even that didn't last long.
Westphal was fired after a 2-5 start in Fredette's rookie season. Keith Smart and Malone both opted to go away from Fredette in favor of other guards, most notably Isaiah Thomas, who has outplayed Fredette since their rookie seasons.
The Associated Press contributed to this report.