The 31-year-old DiPietro, the No. 1 pick in the 2000 NHL draft, will be placed on waivers Tuesday before the compliance buyout can be used, the Islanders official told The Associated Press on Monday night on condition of anonymity.
The club will have to pay DiPietro $1.5 million for each of the next 16 years — double the years left on his original 15-year pact with New York. That amount won't count against the Islanders' salary cap.
DiPietro didn't immediately respond to a text message sent to him by the AP on Monday night. He has been limited to 50 NHL games since the 2008-09 season, plagued by multiple concussions and hip and knee injuries that required surgery.
Last season, he played only three games with New York. He allowed 12 goals in those appearances and didn't earn a win. DiPietro was then waived and sent down to Bridgeport of the American Hockey League. He went 9-9 there.
DiPietro signed a 15-year, $67.5 million deal before the 2006-07 season, but he was never able to live up to the contract or his lofty status of being a No. 1 draft pick.
He played 62 games that season and 63 more the following campaign, winning a total of 42 games in that span. Since then, he has made double digit NHL appearances only once, 26 games in the 2010-11 season.
Over parts of 11 seasons with the Islanders, DiPietro is 130-133-8 with 28 overtime losses in 315 games. He has earned 16 shutouts and posted a 2.86 goals-against average and .903 save percentage.
The Islanders are now in the market for a goalie.
Veteran netminder Evgeni Nabokov went 23-11-7 this past season and helped the Islanders get into the playoffs for the first time since 2007. Nabokov, who will turn 38 later this month, is a free agent and could be a candidate to return to New York.
As of now, the only goalies the Islanders have under contract are Kevin Poulin and Anders Nilsson, who are both 23 and largely unproven.
Poulin is 7-9-1 in 21 NHL games over three seasons with the Islanders, plus two games in this year's playoff series against Pittsburgh in which he allowed only one goal. Nilsson's NHL experience is limited to four games during the 2011-12 season, when he went 1-2 and gave up 10 goals.