Montreal placed Parenteau, 32, on waivers Sunday with the intention of buying out the final year of his deal.
Parenteau was due $4 million US in 2015-16, but will now count only $1.33 million against the Canadiens' salary cap in each of the next two seasons.
"It was a difficult decision to make, but we feel it gives us more flexibility as we continue to improve our club and provide our young prospects with an opportunity to earn a spot on our roster," said general manager Marc Bergevin.
Parenteau was acquired by Montreal from Colorado last summer along with a fifth-round draft pick in exchange for forward Daniel Brière.
Parenteau had 22 points (eight goals) in 56 regular-season games with the Canadiens in 2014-15.