The 28-year-old's contract expires this summer and he has been unable to agree a new deal to remain at the Allianz Stadium.
The two parties agreed terms on a new deal late last year but the Old Lady's winter transfer business, which included bringing in Dusan Vlahovic and Denis Zakaria from Fiorentina and Borussia Monchengladbach respectively, saw them attempt to alter the terms of the agreement.
Dybala and his agent rejected the new terms, and a meeting with Juventus on Monday failed to lead to a resolution.
Dybala will now leave the club this summer after seven years in Turin.
"The most important change is that Juventus has not renewed Paulo Dybala's contract," Juventus chief executive Maurizio Arrivabene told Tuttomercatoweb.com.
"With the transfer market, I reiterated it: the approach was sincere. With the signings made in January, with the arrival of [Dusan] Vlahovic, Paulo's position is not what it was any more at the centre of the project.
"That is why we preferred to make this kind of decision."
"The parameters were different. I had already talked about it; no one has ever questioned Paulo's ability," he continued.
"There were considerations to be made on appearances, contract length and financial considerations.
"We had to make our choices in January, we made them, we got here. For Juventus, it would have been easy to make a lower offer, but it would have been disrespectful towards Paulo. The decision has been made. Today's meeting was friendly, clear and respectful."
Dybala joined Juventus from Palermo for €40m in the summer of 2015 and has won five Serie A titles and four Coppa Italia trophies at the club.
He has made 29 appearances in all competitions this season, scoring 13 goals.
