While her time at Fox was occasionally rocky, the network's news executive Bill Shine said that "we have thoroughly enjoyed our association" with her.
"We wish her the best in her future endeavours said Mr Shine, Fox's executive vice president for programming. A source described the parting as amicable, saying Fox and Mrs Palin had discussed renewing her contract but she decided to do other things.
She signed up to deliver commentary on Fox in January 2010 for a reported 1 million dollars (£660,000) a year.
It was seen as a coup for both sides at the time - the former Alaska governor was just a year away from her high-profile run for the vice presidency and considered one of the leading contenders for the 2012 presidential nomination.
At Fox, she had a platform on the most popular network for conservative viewers. Fox installed equipment in Palin's home in Wasilla, Alaska, to make her regular appearances easier. But there were indications of tension between her and Fox News chairman Roger Ailes, who said in 2011: "I hired Sarah Palin because she was hot and got ratings."
When Palin announced she would not be a candidate in 2012, she said it on a conservative radio show, which did not please the company paying her to be a contributor.
Mr Rove recently renewed his contract at Fox until the 2016 election.