The 31-year-old has not pitched since Aug. 20, when he threw 5.0 innings and struck out eight against the Tampa Bay Rays. He's been trying to recover from a strained left flexor tendon in his pitching arm, but suffered a setback in his rehab last week.
Paxton finishes the regular season with a 1-1 record and a 6.64 ERA over five starts. There could still be the possibility of Paxton returning during the playoffs, if the Yankees are still playing.
His time with the Yankees could be over after two seasons with the team, as his contract expires at the end of the year.
Paxton went 15-6 in 2019 with a 3.82 ERA, after playing the previous six seasons with the Seattle Mariners.