With his City contract expiring this summer, Davies leaves the Coral Windows Stadium after nearly four years with the Bantams.
The 30 year-old - a former club captain at City - has been given the same honour at Ross County following his move to the Global Energy Stadium.
Having initially joined the Bantams on loan from Stoke City back in September 2011, Davies made 120 appearances in total for Phil Parkinson's men.
Davies made his move to Valley Parade permanent during the summer of 2012 before helping City into League 1 less than a year later.
Speaking about Davies' departure, Parkinson said: “We thank him for what he has done for this club – he’s been a tremendous player during his time here.
“But that’s the way football is. Things move on and sometimes you have to evaluate the squad.
“We’re working hard to balance things in terms of age and players who will move us forward.”
Parkinson also confirmed that City have ended their interest in signing Jon Stead.
Stead ended the last two seasons on loan with the Bantams from near neighbours Huddersfield Town but the striker, who is now a free agent, will not be making his move to Valley Parade permanent.