Katona says he was notified by the promotion last November.
The Winnipeg native won his first eight professional MMA bouts, but suffered defeats in his last two outings.
Katona released a statement on Instagram after confirming his release from the UFC.
"With the news out now I figured I should address it," Katona posted on Instagram. "My release from the UFC came as a surprise but it hasn’t changed my passion or drive to continuing my pursuit of being the best in the world. Originally I wanted to forego announcing my release until I had something tangible and exciting to produce alongside it."
"Fortunately I have a great team behind me helping to chart out the path to becoming the best version of myself. There’s lots to look forward to and can’t wait to show it all off to you my supportive family, friends, and fans. Thanks everyone, this year’s going to be exciting."
The 28-year-old lost unanimous decisions to Merab Dvalishvili at Fight Night Ottawa last May and to Hunter Azure at Fight Night Vancouver in September.
Katona won the featherweight tournament of The Ultimate Fighter: Undefeated, defeating Jay Cucciniello via a unanimous decision at The Ultimate Fighter 27 Finale.
He continues to train at SBG in Ireland with John Kavanagh