The 30-year-old had been on manager Nathan Jones’ radar earlier in the season, only for finances put paid to any possible move, as he eventually signed for fellow second tier side Millwall instead, with Robert Snodgrass coming in as the left-footed player Town were after.
However, he played just one match for the Lions, that when coming on for the final 13 minutes of the 3-0 defeat to Fulham in February, suffering a hamstring injury which kept him out for the rest of the campaign.
Freeman signed at Bramall Lane from QPR in July 2019, making just 24 appearances and scoring once, with eight league and cup outings this year, but only four starts.
He had loan move to Nottingham Forest last term, before his move to the New Den this year, as a statement on the Blades website said: “Paul Heckingbottom has made an early start in formulating his squad for the 2022/23 campaign.
“David McGoldrick, Lys Mousset and Luke Freeman have all been informed their contracts will not be renewed and subsequently they will become free agents at the end of June.
“United would like to thank David, Lys and Luke for the contribution they made to the club in their time as a Blade."
Speaking about Freeman back in February, Jones said: "Luke Freeman we would have liked to have done.
"I know Luke, I’ve played with Luke, I’ve been an admirer of Luke, he’s been fantastic, it’s just we couldn’t get near the finances for him, so that was that.
"For Luke Freeman there was (an enquiry) because he’s different to what we have, really, really different.
"I know him, great character, he wanted to come, it’s just we couldn’t get near the finances and that’s basically all on that."