Arsenal has reached an agreement to terminate Shkodran Mustafi's contract, Sky Germany reports.
Mustafi's deal had six months to run, but the defender is now set to return to Germany and sign for Schalke 04.
He will be reunited with Sead Kolasinac, who left the Emirates on a six-month loan deal.
Schalke will bring Mustafi in as a replacement for Liverpool-bound Ozan Kabak.
The 28-year-old has not started a single league fixture for Arsenal this season.
Gunners boss, Mikel Arteta, currently has five centre-halves at the club; Gabriel, David Luiz, Pablo Mari, Rob Holding and Calum Chambers.
Mustafi is not in Arteta's plans, as shown by his team selection in previous games.
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