The 30-year-old has battled for game-time this season, starting just two games plus seven substitute appearances, and agent Rob Moore reveals to this website that the player will retire from playing at the end of the season.
Ajax also confirm that they have already reached a mutual agreement to part ways with Davids, who has enjoyed two separate spells at the club.
“His contract expires in June and we have discussed that issue at length and have come to the decision that we will not be taking up the option we had on his deal,” Ajax boss Ari Efstathiou tells snl24.com/kickoff.
“Look, Lance is a model professional, but we have to give the younger players in our squad a chance.”
Davids – who has been capped at all levels of international football and has also played in Germany, Sweden and Belgium – holds a Sports Management qualification that he is now expected to make use of.
The holding midfielder’s second spell with Ajax has not been what he expected as he has started just 18 games since returning at the beginning of 2013.