Wallis was told of his termination at a meeting with club officials on Monday.
The dual premiership player confirmed the news to AFL.com.au and expressed his disappointment at the club's decision.
"Basically I won't be re-contracted for the 2014 season and I'm moving onto greener pastures," Wallis said.
"Anyway, that's life and that's what happens."
"I will probably explore other options outside of football, but I'll never say never. Twenty-seven years in the industry and probably the way it finished is a little bit disappointing, but that's the way the club has chosen to go and I respect that."
Former teammate Steven Alessio was charged with delivering the news to Wallis.
"That's the tough part of this industry, telling people they're no longer required," Wallis said.
"I've sort of been involved with that with players, and no doubt it would have been a tough job for 'Ses', if he was the message man, which he no doubt would have been. I think it would have been tough for him.
"It's been a tough year all round but my motto is 'everything happens for a reason', and the next chapter of the Wally journey begins.
"That's the exciting part. You don't look backwards, you look forwards."
It caps off a disappointing year for Wallis, who was implicated in the notorious supplements scandal of 2012, accused of failing to accurately record the substances taken by Bombers players.
Essendon is yet to name a senior coach to take over while James Hird serves his 12-month suspension, and Wallis insists he doesn't know who will be appointed.
Wallis played 127 games for the Bombers over 14 seasons at the club.
He continued at the club as an assistant coach before moving to Fremantle as an assistant in 2008.
Wallis returned to Essendon as a development coach in 2010 when Hird was appointed senior coach.
In 2011, Wallis was suspended for 14 games and fined $7500 for betting on AFL games.