The Mercury announced Saturday that the franchise and Charles had agreed to terms on an immediate contract divorce.
"After discussions with Tina and her agent, it was best for both parties to go our separate ways at this time," Mercury general manager Jim Pitman said. "Due to circumstances both in and out of our control, our season has not gone according to our plan, and we will continue to pursue all avenues for improvement."
Phoenix coach Vanessa Nygaard declined to discuss the reasons behind the separation but said it was "best for both parties" and that the team is "ready to move forward."
Charles will have to clear waivers, which she is expected to do because no team appears to have the salary-cap space to pick up her pre-divorce contract. Once she is cleared, she can become an unrestricted free agent and sign with a team that has cap space to give her at least a prorated minimum salary.
One team that can is Seattle, which is considered a front-runner for Charles. The Storm have three of Charles' U.S. Olympic teammates in Sue Bird and Breanna Stewart -- both also fellow UConn graduates -- and Jewell Loyd.
Storm coach Noelle Quinn declined to comment Saturday when asked about Charles' potential addition.
Nygaard, speaking before Saturday's game at the Dallas Wings, said the Mercury will be looking to play more small ball without Charles, adding that she hopes the team is quickly able to find new players to fill the roster.
"The players are very focused and they are not happy with how we've been playing, and so they're ready," Nygaard said of the Mercury, who entered Saturday night with a 6-12 record. "This is an extremely competitive group. When it gets to be like this, all they want to do is win. And so we had one of our most focused shootarounds we've had all year, and I know that they're going to be excited to play tonight."
Charles, 33, was averaging 17.3 points and 7.3 rebounds for the 6-12 Mercury, who have been without center Brittney Griner all season, as she is being detained in Russia. The Mercury also have dealt with various injuries and illness in their first season under coach Vanessa Nygaard. They made the WNBA Finals last season under coach Sandy Brondello.
The Mercury signed Charles in February to a reported one-year deal for $108,000. Charles was the WNBA's scoring leader in 2021 after averaging 23.4 points while playing for the Washington Mystics. She didn't play in the league in the 2020 COVID-19 bubble season in Bradenton, Florida.
The No. 1 draft pick in 2010, Charles played with the Connecticut Sun from 2010 to '13 and with the New York Liberty from 2014 to '19. She was the 2012 WNBA MVP and is an eight-time All-Star and three-time Olympic gold medalist. She won two NCAA titles at UConn but has not won a WNBA championship.
ESPN's Alexa Philippou contributed to this report.