The 21-year-old’s move to Tannadice in 2014 was shrouded in controversy, with Rangers and United having to go to a transfer tribunal after a bitter dispute over the level of compensation for his switch.
Tangerines chairman Steven Thompson insisted the £204,000 fee decided by the tribunal was ‘ridiculously prohibitive’.
Rangers hit back with a claim - later denied by Thompson - that United argued they should only have to pay two, rather than 10, years of compensation because the Ibrox club had only existed ‘in its current form’ for that length of time.
He never fully lived up to the hullabaloo that surrounded his arrival and he made just 71 appearances for United in three seasons, during which he also spent time on loan at Livingston.
Telfer, whose last appearance for the club was in the recent play-off final defeat by Hamilton, said: “I am disappointed that my time at United has come to an end. I’ve enjoyed being part of this fantastic club and have made many friends on and off the park. I wish I could have helped United back into the Premiership. And, while I’ll look back on that with disappointment, I’ll always remember my time at Tannadice with great fondness.”