The 27-year-old played 78 games for the Eagles in a nine-year career that began when he was recruited with pick No.38 in the 2001 draft.
He played a major role in the club's 2006 grand final win over the Sydney Swans but he has struggled for fitness in recent years, playing just 24 games in the past three seasons.
Hansen booted 46 goals in 10 WAFL games with Swan Districts in 2010 and helped the club to a long-awaited premiership, but Eagles coach John Worsfold said he couldn't rely on the forward's fitness at AFL level.
"Ash has been a wonderful contributor to our football club in his nine years here," senior coach John Worsfold said.
"Unfortunately, his body will not allow him to play the role we require of him.
"He has been highly respected by his teammates and by everyone else at the club throughout his time here. We wish Ash every success with his future endeavours and hope to still see a fair bit of him around the club."
Hansen said he was disappointed with the decision, believing he was still capable of playing senior football.
"I thought my body was good enough to play a role for side, but the club sees it differently. That's a tough call, but I respect it and look forward to the next opportunity wherever that may be," he said.
"I have had a terrific time at the club, and feel privileged to have played with so many champions of the game. I would also like to thank all the staff that have supported me so I could achieve what I have.
"The next chapter now begins and I will take time to assess what lies ahead both in and away from football."
