PSV are now likely to cash in on the 24-year-old, who has spent his whole career to date at the Eredivisie giants, in the January transfer window.
A statement on the Dutch club's website read: "PSV and Ibrahim Afellay have jointly concluded that, for several reasons, it is unrealistic to have his contract extended."
The statement added that "Afellay has pledged to make every effort to ensure he would not leave PSV without a reasonable fee for the club".
The midfielder scored his first international goals with a brace in the 4-1 Euro 2012 qualifying win over Sweden in Amsterdam last week.
He has been linked with a host of Premier League clubs including Arsenal, Everton, Liverpool and Manchester United.