The Chiefs say 23-year-old Nadolo has asked to be released from his playing contract for "personal and family reasons".
And Exeter revealed that it comes just 24 hours after he admitted to the city's magistrates a charge of drink-driving, which resulted in an 18-month driving ban and £950 fine.
Nadolo joined the Chiefs from French side Bourgoin in January. The Fijian winger is now set to return to Australia within the next few days.
Last month, the Chiefs were docked two league points and fined £5,000 by the Rugby Football Union after fielding an extra overseas player in their Premiership match-day squads against London Irish and Leeds Carnegie this term.
Exeter thought Nadolo had a Fijian passport, which meant he would not be classed as an overseas player. But he arrived in Britain on an Australian passport, which counts as overseas in terms of Premiership regulations.
Nadolo made five first team appearances during Exeter's debut season in English rugby's top flight.
Chiefs head coach Rob Baxter said: "Nemani and the club have been in discussions for a few days about releasing him from his current contract with us.
"He has told the club he is keen to return to Australia with immediate effect for personal and family reasons, and we have granted that request.
"As a club we are aware of Nemani's recent court appearance and take a very dim view of his actions. He is aware he has not only let himself and his family down, but also the club.
"Clearly, he made an error of judgment that night, which he now regrets.
"He is an honest young man who is disappointed and upset at what he has done. We offer Nemani our best wishes for the future and thank him for his contribution during his time with the Chiefs."
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