The ex-Barcelona, Inter Milan, Tottenham and Ajax player, 37, joined up with the Eagles in August and made seven starts for George Burley's team - including Scunthorpe's 3-0 success over them at Glanford Park.
He struggled with life in the Championship and was not included in the squad for the Eagles' defeat at Middlesbrough on Saturday.
A brief statement on Palace's official website read: "The club would like to thank Edgar for his time at Palace and wish him all the best of luck for the future."
Sheffield United are reviewing the club's training practices because manager Gary Speed felt his players are too susceptible to hamstring injuries.
Andy Reid, who joined on loan from Sunderland last week, was the most recent to suffer a hamstring problem - meaning he was unable to make his debut in Saturday's 2-1 loss to Ipswich Town.
"We'll be taking a look at everything we do during training and before and after games with the physios and fitness staff to see if there's something we can change," said Speed.
"While it certainly is bad luck, we've also been suffering far too many hamstring injuries for my liking of late and that's something we've got to examine."