Outfielder Nyjer Morgan was activated from the 60-day disabled list and released from his contract, the Indians announced Tuesday.
In other moves, right-hander Josh Tomlin was recalled from Triple-A Columbus to start Tuesday night's game against Cincinnati and outfielder Tyler Holt was optioned to Columbus. Instead of heading to New York with the Indians this weekend, Holt departed for Scranton, Pa.
Morgan injured his right knee May 14 in Toronto, hitting it hard on the artificial turf in Rogers Centre as he was chasing a double by Adam Lind.
"I knew I wasn't going to get to it," Morgan said after that game, wearing a heavy brace. "So instead of doing a 20-foot dive, I just pulled up and my knee hit the ground. I thought I was fine at the time. But when [Brett] Lawrie came up in the next at-bat and hit that ball into the gap, me and [Michael] Bourn went back to get it. On my first step, that's when I kind of felt something."
Indians manager Terry Francona said Morgan has been home rehabbing and was going to remain there.
"He's not going to be available for the rest of the year," Francona said. "(General Manager) Chris (Antonetti) talked to him and was a mutual 'Cut the cord.'"
Francona said Morgan never underwent surgery.
Morgan, who has an alter ego he calls "Tony Plush," made the team in spring training as center fielder Michael Bourn opened the season on the disabled list with a hamstring injury. Morgan hit .341 in 15 games with a double, home run, six RBI and eight runs scored.
"He really helped us. He gave us a spark, especially the beginning of the season when he was playing center field and leading off," Francona said. "He was getting on base a ton.
"It was unfortunate for him that (the injury) happened because he felt he had a lot to prove. He came back and was proving it and having an option we could send him to Triple-A. That probably didn't thrill him, but it's nice being able to have guys in the organzation who can go up and down."