Doyle, who was out of contract this summer, made 94 appearances for City in two seasons after joining the club for a second time back in August 2012. The 27 year-old had previously played for the Bantams during a loan spell from Derby County during the 2006/07 season.
Doyle's final performance in a City shirt came in the club's victory over Tranmere Rovers in early May on the last day of last season.
As part of City's 'history-makers' squad, Doyle played in the club's memorable Capital One Cup victories over Wigan Athletic, Arsenal and Aston Villa, as well as the final itself against Swansea City.
At the end of that same amazing 2012/2013 campaign, Doyle also featured in the Bantams' League 2 Play-Off Final victory over Northampton Town.
Parkinson said: "“We have decided to shake hands with Doyley and part our separate ways.
“We thank him for all of his efforts over the last two years he has been with the club and we wish him all the very best for the future.”