The move made Tuesday saves the team nearly $6 million under the salary cap for each of the next seven years. Bryzgalov was two seasons into a $51 million, nine-year contract he signed in 2011.
"Obviously it's a costly mistake that we made," general manager Paul Holmgren said. "You know Ilya, it's hard to fault him. I still believe he played pretty good, but in a salary-cap world, you need to make decisions from time to time that put you in a better light moving forward and this is one of those."
Last week, the Flyers exercised the first of their two compliance buyouts on forward Danny Briere.
Bryzgalov was 52-33-10 with a 2.61 goals-against average and a .905 save percentage in the regular season for Philadelphia, which failed to make the playoffs this year.
"What's the sense of looking back? Today we look forward," Holmgren said. "I'm not going to look back. I admit it was a costly move, but we have to move forward. No sense looking back."
Bryzgalov's quirky personality and sometimes brutal honesty with the media didn't always endear him to teammates. But the Flyers say that didn't factor into this decision.
"I think Ilya is a colorful guy," Holmgren said. "Does he say things out of the blue sometimes? Absolutely, but I don't think he's any different than a lot of other players I have been associated with. I didn't have an issue with that. This is strictly a business decision."
The Flyers acquired former NHL Rookie of the Year Steve Mason from Columbus before the trade deadline to back up Bryzgalov. Mason went 4-2 with a 1.90 goals-against average and .940 save percentage for the Flyers.
Mason will likely compete for the starting job with a goalie currently outside the Philadelphia organization.
"We're in the market for goalies," Holmgren said. "How we do it, remains to be seen. There's options out there right now and we'll go at it the best way we can."