The decision to release Babin is something of a surprise move as he recorded 18 sacks last season after joining from the Tennessee Titans on a five-year, $28 million deal.
But the 32-year-old has accumulated just 5.5 sacks so far this season and head coach Andy Reid has opted to sever ties in order to give more chances to younger players.
"We appreciate everything that Jason has given this team over the last couple of years," Reid told the Eagles' official website.
"We wish him all the best as he continues his career. By releasing him today, this gives us an opportunity to give more playing time to some of younger guys in the defensive line rotation."
Meanwhile, star wide receiver DeSean Jackson will be out for the rest of the season after fracturing multiple ribs in the defeat to the Carolina Panthers on Monday night.
The speedy wideout, who suffered the injury on an end around in the opening quarter, was the leading receiver on the team with 700 yards.
Quarterback Michael Vick and running back LeSean McCoy are unlikely to recover from concussions in time for the clash with the Dallas Cowboys on Sunday.