A spokesman said: "Sunderland have announced the termination of midfielder John Oster's contract with the club."
Leeds ended Oster's loan spell after finding him guilty of misbehaviour at the club's Christmas party.
He and Jamie McMaster were suspended on Christmas Eve by boss Kevin Blackwell after Leeds received complaints about the pair.
It was Oster's second indiscretion since he joined Leeds, initially on a one-month loan in November.
After that deal was extended, Oster was arrested and formally cautioned by police on December 16 after being arrested on suspicion of assault following an incident outside a Durham nightclub.