The 19 year-old forward did have another year left on his contract with the Bantams but he will now leave with immediate effect.
Stephenson, who graduated up from City's youth ranks in May 2011, enjoyed loan spells with Hinckley, Woodley Sports, Stocksbridge Park Steels and Southport during his time at Valley Parade.
The Jamaican-born forward's one and only senior appearance for City came in March 2011 - while still as an apprentice - when he came on as a second half substitute during the Bantams' home match with Shrewsbury Town.
The football club would like to thank Darren for all his efforts while with City and wish him all the very best for the future.