Powell was involved in a bar room brawl last month and hasn't played for Wasps since.
And having undertaken a review of Powell's actions in the Walkabout pub in Shepherd's Bush, Wasps have now decided to part company with the 29-year-old.
"London Wasps can today announce that Andy Powell is to leave the club by mutual consent," said a club statement.
"This announcement comes following a thorough and detailed review, between the player and the club, of all of the evidence arising from the incident for which Andy was initially suspended. This included a review of CCTV footage of the incident and statements from those witnesses present throughout.
"Both parties are satisfied that this matter has been dealt with in a proper, fair and appropriate manner and agree that the conclusion reached is in their respective best interests for the future.
"Both parties have also agreed that there will be no further comment from either side and the club considers the matter now closed."
Powell only joined Wasps last summer after his time with Cardiff Blues came to a troubled end.
The blindside flanker cum No8 pleaded guilty to driving a golf buggy while unfit through drink in March 2010, an offence for which he was banned from driving for 15 months and fined £1,000.
Powell has been linked with a return to Wales with the Newport Gwent Dragons, although the former Beziers back row may now be a target for a number of big-spending French sides.
And, having also been a target for the Crusaders prior to his move to Wasps, Powell's departure may now interest more Super League clubs either before or after the 2011 World Cup.