Farid Basharat became a free agent after the UFC let his contract lapse following his July unanimous-decision win over John Garza at UFC 329.
The 28-year-old bantamweight leaves the promotion unbeaten at 16-0 overall and 7-0 in the Octagon, despite saying he hoped to re-sign.
UFC officials have not offered a new deal, with the report pointing to Basharat's six decision wins and a likely pay raise as factors in the non-renewal.
Basharat was ranked No. 13 in the UFC's media rankings and will now drop out, while his next landing spot could include the PFL, where brother Javid Basharat already moved.