The 35-year-old former national team star made only four starts and six appearances off the bench in 18 Premiership and League Cup matches before the mid-season December break.
Pienaar scored no goals as Wits won the League Cup but fared disastrously in defence of the league title, winning only twice in 14 matches and lying bottom of the table.
“The signing of Steven did not work so we have parted ways and wish him all the best in the future,” coach Gavin Hunt told the South African media.
“Propping up the table has forced us to make changes to our squad. We lack depth and need to beef up our squad during the January transfer window.”
Pienaar left relegated Sunderland in June to join Johannesburg club Wits, who won the South African Premiership for the first time last season in their 96-year history.
But the class Pienaar was expected to bring into the team never materialised and he could not stamp his authority in the often fast-pace, highly physical South African football environment.
Johannesburg-born Pienaar played for Ajax Amsterdam, Borussia Dortmund, Everton (twice), Tottenham and Sunderland during 16 years in Europe.