Mthembu recently went on trial at Phunya Sele Sele, having fallen out of favour at Chiefs.
However, Celtic co-head coach John Maduka says Mthembu is too similar to the targetmen they currently have at their disposal.
"Yes, we released him on Friday after our practise match against a selection team from Johannesburg," Maduka tells KickOff.com.
"After that game we did let him go. He did very well against Lesotho but the problem is that he is more similar to the strikers we have. Remember we have Atusaye Nyondo, Ayanda Dlamini, Fiston Abdul Razak and Moeketsi Mvula. And if you look at all those players you can see they are similar to him. We were looking for something different. "
Maduka says they will continue looking for a recognised forward.
"Our search for a striker will continue, especially in this window period but we are looking for someone who's been there before, not an unknown."