The 38-year-old had served as second-choice last season to the now-Manchester City keeper Ederson Moraes, but slipped below Bruno Varela and Belgian teenager Mile Svilar in the pecking order this term.
“The adventure is over for me and I want to thank you for your support and admiration, you can be sure from now on I will support all of you,” a tearful Cesar told his team-mates in a video on the club website.
“It’s a difficult decision to make but I’ve been thinking about it for a month.”
Cesar, who won the 2010 Champions League title with Inter Milan, had been due to stay at the Estadio da Luz until the end of the season.
He joined Benfica from Queens Park Rangers in 2014 after playing in Brazil’s infamous 7-1 World Cup semi-final thrashing on home soil by Germany.
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