Mtsweni is believed to have linked up with Free State Stars.
The Chilli Boys have also roped former Orlando Pirates reserve team coach Zipho Dlangalala into their technical team, as was revealed by KickOff.com.
Dlangalala, who left Pirates last week, joins Mbuyiselo Sambu in serving as assistant coaches to head coach Dan Malesela.
Chippa released a statement, which reads: 'The club has released duo, goalkeeper Ayanda Masiko and defender Simphiwe Mtsweni from their contracts, club CEO Peter Koutroulis has confirmed.
'Goalkeeper Ayanda Masiko and defender Simphiwe Mtsweni both found it difficult to break in to the first team.
'The club would like to thank the players for their professionalism and wish them all the best in their endeavours in life.
'Meanwhile highly rated development coach and scholar of the game, Zipho Dlangalala has joined Chippa United as an assistant coach to head coach, Dan Malesela until the end of the season. Dlangalala will join Mbuyiselo Sambu as assistant coach.'