The 34-year-old had spent most of his career at the club, which said it was now giving him the chance to take his first steps as a coach.
"The club leadership has, after weighing things up with coach Thomas Schaaf and a careful judgment of the sporting and financial aspects, decided not to offer Torsten Frings a new contract as a professional player," the club's sports director Klaus Allofs told a news conference.
"Werder Bremen will offer him a post which allows him to develop as a coach and acquire the necessary licence."
"We expect his reply in the next few days," the club said.
Speaking to local Bremen newspaper Kreiszeitung Syke, Frings said: "I have to accept it. It's a shame, I would like to have ended with a more successful season."
"Torsten has been the life and soul of the team for many years and has given everything for Werder Bremen," coach Thomas Schaaf said.
"We've weighed everything up carefully and had a lot of conversations with him," said Schaaf.
