The Texans will save $9.59 million by not picking up the cornerback's fifth-year option for the upcoming season.
Hargreaves, 24, was drafted 11th overall by the Tampa Bay Buccaneers in 2016. He was released by the Bucs midway through the 2019 campaign and claimed by Houston off of waivers in November.
The Florida product started 16 games as a rookie but has played in just 25 contests since.
In six games with the Texans last season, Hargreaves recorded 21 tackles and two passes defended.