Brett was cited by the SFA for betting on over 6,000 matches, including eight times against his own team - five of which featured Brett in the line-up.
For this reason, Cowdenbeath have decided to terminate his contract with immediate effect.
The Fife club have offered to continue paying the player for the remainder of the 2016/17 season, so long as he meets certain conditions put down by the club as he seeks to get help for his gambling problems.
This announcement comes one day after Brett was given a four-game suspension by the SFA, with a further four-game suspended ban, for using discriminatory language on social media.
Brett has been with Cowdenbeath since 2009 as the club rose to the Championship from League Two before falling back down again.
In 2014 the player suffered personal tragedy when he his twin-daughter and then his wife died just six months apart.
Click here for Cowdenbeath’s statement in full.