The Broncos informed Lynch they are releasing him, NFL Network's Tom Pelissero reported. The team later announced the news.
"Vance Joseph] and I met with Paxton this morning and informed him that it's best for everyone to make this move," [Broncos president of football operations/general manager John Elway said in a statement. "We appreciate all of Paxton's hard work as a Bronco, and we wish him well in the future."
The Broncos used a first-round pick on Lynch in 2016, but he failed to seize control of the starting job or impress with playing time over the past two seasons.
In five appearances with four starts, Lynch totaled a 1-3 record and completed 79 of 128 passes for 792 yards and four touchdowns against four interceptions. He was sacked 18 times and fumbled four times, losing two.