The 29-year-old Bafana-capped full-back spent five seasons with the Buccaneers after joining from Bidvest Wits ahead of the 2012/13 campaign.
“An agreement has been reached for the mutual termination of the contract following a meeting between both parties yesterday [Monday].
“The club would like to thank Mr Phungwayo for his service and wish him the best of luck in his future endeavours,” Pirates announced on their website.
Phungwayo did not feature for the Sea Robbers in a competitive match this season. There has been no indication as to where he will play next.