The Packers waived the 10-year NFL veteran through the league before releasing him and then surprisingly listing him as having failed to disclose a physical condition.
General manager Ted Thompson announced the decision during Wednesday's team practice. The team did not provide details about the medical condition.
Bennett posted on his social media account last month that he was contemplating retirement at the end of this season.
"After conversations with my family I'm pretty sure these next eight games will be the conclusion of my NFL career," Bennett said on Instagram.
"To everyone who has poured themselves and time into my life and career. These next games are for you. Thank you."
He had just 24 catches for 233 yards and no touchdowns in this his first season for Green Bay.
Bennett was inactive during the Packers' Monday night loss to Detroit. Then he was waived Wednesday afternoon.
Bennett made headlines earlier this season when he raised his fist and then sat down on the players bench during the national anthem.
"Just a sign of unity," Bennett said of the anthem protest, part of a series of similar actions by players protesting the treatment of minorities by law enforcement. "I am socially aware. I understand what's going on, and I don't turn a blind eye to it. I am part of the conversation."