The Northern Irishman was out of contract at the end of the season, but has now been told by McCoist he will not be offered a new deal.
Little broke the news on his Twitter page when he posted: "It has been the best eight years of my life. Being a Ranger has been an honour and I'll be one 'til the day I die."
The 25-year-old has endured a frustrating campaign this season after breaking his jaw and cheekbone against Dunfermline in November.
In total, he netted 38 goals for the Light Blues, including his March 2012 winner in a 3-2 derby victory against Celtic before the club was liquidated that summer and demoted to the bottom tier of Scottish football. McCoist - who has still to confirm whether Ross Perry and Chris Hegarty will also be released - paid his own tribute to Little for his years of service.
He told the Rangers website: "Andy has enjoyed some great moments with the club.
"His commitment to Rangers has been excellent and he enjoyed a good partnership up front with Lee McCulloch last season. We wish him all the best."
Chris Hegarty is also heading out and ross Perry may be another casualty of the end-of-season reboot.
Hegarty's agent Stephen McCranor said: "Chris and the club agree that he needs first-team football.
"Ally has indicated that if a club comes in for him either on a permanent basis or on loan he wouldn't stand in the way, which Chris appreciates.
"He had a great season last year, but was unlucky to injure himself scoring in the opening game of this season at Ibrox and missed the rest of the campaign. The season has ended at the wrong time for him as he's in great shape and ready to play. He remains a Rangers player at this stage but the likelihood is he will start next season at another club."