Had Williams lasted the day on the roster, his nonguaranteed contract would have locked in for the remainder of the season.
Williams, a favorite of Coach Mike D'Antoni, averaging 5.2 points and 4.5 rebounds in 32 appearances. He started 11 of the Lakers' 34 games, including opening night in a win over the Clippers.
The move opened up a roster spot, which could come into play if the Lakers make a trade before the Feb. 20 deadline.
The franchise can also sign a player to a 10-day contract, an option that became available to teams on Monday.
Williams was signed for $1.1 million, earning in the neighborhood of $450,000 during his stint with the Lakers.
If Williams clears through the 48-hour waiver process, the Lakers could technically re-sign him -- should both sides agree to terms.