Ronald Waterreus is seeking a new club as Rangers move closer to replacing him with another veteran goalkeeper, Lionel Letizi, of Paris St Germain.
Ronald Waterreus was refused a pay rise by Rangers
The French club have been quoted as saying that they will release Letizi from his present contract.
And Waterreus' agent, Kees Ploegsma, said: "I've no intention of coming to Scotland now because the deal is off.
"Both Ronald and I are disappointed, but there was no room for negotiation and Ronald has options elsewhere."
The 35-year-old goalkeeper was recruited in January 2005 as emergency cover after Stefan Klos suffered ligament damage in a training ground incident.
He kept his place when the German returned to fitness but is believed to have been refused a 25% wage increase by new manager Paul Le Guen.
Waterreus had already dropped his demands for a new two-year contract when he was told the Glasgow club were only willing to offer one more season.
"I know where he is going and so does Ronnie, but it won't be Rangers and that is their loss," said his agent.
Rangers confirmed that Waterreus was no longer their player.
"The Dutchman has decided not to accept a one-year extension on exactly the same contract he was on last season," said a statement.
Rangers moved nearer to finding a replacement when PSG agreed to free Letizi.
PSG, who have signed Mickael Landreau from Nantes, will allow the 33-year-old to leave for nothing as a reward for six years of service.
The player's agent, Eric Castagnino, said: "There was contact with Rangers last week and now we are waiting to hear back from them.
"Lionel has other options, but the move to Scotland interests him and, of course, the fact that Paul Le Guen is their coach makes it all the more attractive.
"Rangers won't have to pay a fee for Lionel because we have reached an agreement with PSG to allow him to move on a free transfer."