The 39-year-old Woodson had a chronic left knee injury last season and had surgery in December. He was placed on injured reserve Nov. 26.
Woodson had said he'd like to return to the Raiders this season and doesn't want to end his career injured.
"Rod Woodson is one of the greatest defensive backs to ever play the game," Raiders coach Norv Turner said in a statement. "He has been a leader on and off the field during his time with the Silver and Black. We appreciate Rod's contributions to the success of the Raiders."
A call to Woodson's agent, Eugene Parker, was not immediately returned Tuesday afternoon.
Woodson hurt his knee four days before the team's first preseason game, but tried to play through the pain. He had surgery Sept. 9 and missed the team's second game against Cincinnati.
Woodson tore the anterior cruciate ligament in his right knee in 1995 and missed most of the season with Pittsburgh then came back to play in the Super Bowl.
Former coach Bill Callahan said Woodson had been compensating for his knee pain by straining other muscles in his lower body. He played in Oakland's season opener at Tennessee on Sept. 7, then missed the following week's game. After his operation, he played 13 days later at Denver.
During the Raiders' Super Bowl season two years ago, Woodson made a momentum-changing 98-yard interception return for a touchdown in a 34-10 Monday night win over the Broncos that snapped Oakland's four-game losing streak.
Woodson, a 17-year veteran who spent the last two seasons with Oakland, is third on the NFL's career list with 71 interceptions. His 1,483 yards on interception returns are the most in league history.
He was the first player to make the Pro Bowl as a cornerback, kick returner and safety during a career also spent in Pittsburgh, San Francisco and Baltimore. He was a member of the Ravens' Super Bowl-winning team.
Woodson was critical of his teammates during last season's 4-12 debacle, the worst collapse by a team that reached the Super Bowl the previous year.
"We've got some veterans who aren't working," he said at the time. "Some veterans I don't think understand it. They don't want to put in the work. I've been on three other teams and it's like that anywhere you go. Knowing how to play is attitude, that's not ability."
Copyright 2004 by The Associated Press
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