Mariah Carey was rebuilding her career after illness
The pay-out, which ends her five-album deal, was announced in a statement to the London Stock Exchange on Wednesday.
It follows months of speculation and denials from Virgin, a US subsidiary of EMI, that the singer was being dropped following poor sales for her album Glitter.
Carey has described the parting as the "right decision for me".
She signed with EMI in April 2001 for an estimated £70m, one of the most expensive recording contracts in history.
Click here to watch Mariah Carey sing Against All Odds on Top Of The Pops
Emotional breakdown
Speculation that EMI Virgin wanted to sever ties with the performer, who has recently recovered from illness, first surfaced late last year.
Glitter sold just two million copies worldwide, compared with 20 million for her 1993 record Music Box.
Carey had a troubled 2001 after suffering an emotional breakdown which led her to check into a clinic to recover.
The singer was placed in psychiatric care in August after suffering from "extreme exhaustion".
Bad reviews
Her publicist Cindi Berger denied reports at the time that Carey had attempted suicide by cutting herself.
Her first major film, also called Glitter, was postponed until she was well enough to promote it.
But bad reviews ensured it did not recoup its money at the box office.
Virgin signed Carey in April after she quit the Sony label owned by her ex-husband Tommy Mottola.
In a statement Carey said: "I look forward to the many new and exciting opportunities which have now been presented to me. I wish Virgin well."
Alan Levy, the head of recorded music at EMI Records, was equally positive about the parting of the ways.
"We have decided that this is the most prudent course of action for EMI. We wish Mariah the best."
Pressure on EMI
At the time Carey was signed, the label was criticised for paying over the odds for the singer, which some critics saw as a fading star.
In recent months, Alain Levy, the head of recorded music at EMI, has been looking to cut costs.
Last year, the group warned that full year profits could fall 20%, as the music industry was hit by falling CD sales and piracy.
EMI has made two failed attempts to merge, first with Warner Music and then BMG.