Phungwayo is yet to feature this season, having made 17 appearances last term.
The 29-year-old, who largely provided cover to Bucs captain Thabo Matlaba in recent years, initially joined the Soweto giants from Bidvest Wits in July 2012.
Phungwayo's last official appearance for the club was in the 4-1 loss to SuperSport United in the Nedbank Cup final in June, while he also played in the 2017 Carling Black Label Champion Cup.
Pirates released a statement, which reads: 'Orlando Pirates Football Club has parted ways with Patrick Phungwayo.
'An agreement has been reached for the mutual termination of the contract following a meeting between both parties yesterday.
'The club would like to thank Mr Phungwayo for his service and wish him the best of luck in his future endeavours.'
Sea Robbers coach Milutin Sredojevic also has the options of Innocent Maela and Marc van Heerden on the left side of defence.