The centre-back signed for the Turkish giants in September following a seven-year stint at Old Trafford.
Bailly made 113 appearances for the Premier League giants across all competitions, but was far from a consistent starter.
He spent last season on loan at Ligue 1 side Marseille before deciding to leave United on a permanent deal to sign for Besiktas.
The Ivory Coast international signed a reported one-year deal with the Super Lig club, but is already on the lookout for a new club.
A statement from Besiktas on Friday read: "The contract with Eric Bailly, the player of our Football A Team, has been terminated by mutual agreement. We wish Eric Bailly success in his career."
Bailly was banished from the first-team earlier in the month along with four other players 'due to poor performance and incompatibility within the team.'
Despite now being a free agent, Italian reporter Fabrizio Romano claims that he is already closing in on his next move.
Bailly is on the verge of joining Villarreal for the second time in his career having previously played for them between 2015-2016.
Boss Marcelino Garcia Toral 'wants him' to return to the Spanish side, who have been pushing for a move since last week.
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The defender first signed for the club in January 2015 following an impressive spell at fellow LaLiga outfit Espanyol.
He featured 47 times for Villarreal before United made their move in the summer of 2016, signing him in a reported £30million deal.
Ashley Young reveals Zlatan Ibrahimovic made Manchester United teammate Eric Bailly his victim in training
Bailly won the Europa League and League Cup during his first season, although he would not win any major honours after this.
The 29-year-old scored just one goal during a stint at the Theatre of Dreams which was plagued by repeated injuries.
A return to Villarreal now looks to be on the cards for Bailly after he made only eight appearances in a short spell with Besiktas.