Bullard, 32, has not featured for the Tigers this season after being placed on suspension following an incident on a pre-season trip to Slovenia.
"The club has given notice to terminate the contract of Jimmy Bullard," a club statement said. "Mr Bullard has a right of appeal and it would be inappropriate to make any further comment at this time that might prejudice this process."
It added: "The club will continue to focus on the development and performance of the squad going forward and is concentrated on efforts to deliver a positive season on and off the pitch for the Tigers."
Bullard, signed from Fulham for ?£5million in January 2009, attended a disciplinary hearing last week at the KC Stadium, where he was represented by the Professional Footballers' Association.
The former Peterborough and Wigan midfielder, who has started only 19 league games for Hull during his time at the club, has been linked with a move to newly-promoted Barclays Premier League side QPR.