In a statement on their website, the Lions said Proud, who was suspended indefinitely by the club in January after being charged with assaulting a police officer, had been sacked "for failing to meet the expectations and behavioural standards of an AFL player".
Proud was told of the club's decision at a meeting with Lions officials on Wednesday afternoon.
"The Brisbane Lions will no longer compromise our standards and expectations as we seek to build a strong culture for the long term benefit of all players and the Club as a whole," general manager of football operations Dean Warren said.
"Whilst Albert was extremely disappointed with the decision, he understood our position.
"We have offered Albert ongoing support to assist in his transition out of an AFL environment, which can often be a difficult time for some players."
Proud had been given a rookie list opportunity by the Lions this year after being delisted at the end of the 2010 season.
