Richie Paul, James' agent, told the team of his client's decision, which came ahead of a deadline next Monday to decide whether or not to opt out of the last two years of his Miami contract.
James, who was set to make $20 million next season, won his first career NBA titles with the Heat in 2012 and 2013. He also led Miami to the NBA Finals in 2011, when Dallas beat the Heat, and this year, when Miami lost to San Antonio.
After the Heat's last loss in the NBA Finals, James said he wanted time on vacation with his family before considering his future plans.
James said he welcomed the chance for the same free agency freedom he had in 2010, when he signed with the Heat after spending his first seven NBA seasons in Cleveland.
James, a high school star near Akron just south of Cleveland, could attract other talented players alongside him after his stellar stint in Miami.