A statement from LA Galaxy II, the Major League Soccer franchise's development side which competes in the United Soccer League professional championship, confirmed Ontiveros had been released.
"LA Galaxy II have mutually agreed to part way with defender Omar Ontiveros," the statement read.
The 25-year-old Ontiveros was sanctioned by USL on Saturday (AEST) for using foul and abusive language during Galaxy II's game against San Diego Loyal on Thursday (AEST).
Ontiveros used a racial slur against an African-American San Diego player in the 71st minute of the game, according to a USL statement, which he admitted to during a subsequent league investigation.
"None of the facts in the subsequent investigation of the incident by the USL Championship were disputed by any of the involved parties," the USL statement read.
On Saturday (AEST), San Diego took the unusual step of forfeiting the game, which ended in a 1-1 draw.
"We don't even want to recognise being a part of a match where these types of actions take place," Loyal chairman Andrew Vassiliadis said.
"The Loyal in our name is symbolic of the diversity in our community and as a club we will not stand for this."
If confirmed, the decision to give up the point obtained from the draw – and hand an extra two points to Galaxy II – could ultimately cost San Diego a place in the USL play-offs.
The USL's competition strategy committee is to meet at a later date to decide on the status of the result.