The 34-year-old made over 300 appearances for the Royals, but played just once all season due to constant calf injuries and has now followed manager Steve Coppell out of the exit door.
He told the Reading Evening Post: "I am absolutely gutted, but not really surprised not to get a contract. All I wanted was to play my part this season but I never got that chance and that's what really hurts.
"I think if I had physically had that chance then I would have contributed positively. We had a really good opportunity to get into the Premier League had we been more consistent.
"This season has been the most disappointing in my time at Reading. I wanted to go out with a bang, but it ended up a whimper.
"I hope I always will be remembered for my contribution and my time as captain in what is so far the most successful period of the club's history, but I genuinely hope that those achievements are surpassed."