The Australian bowler joined Essex in 2016 from Western Australia and has played in 7 first-class matches for Essex, taking 20 wickets at an average of 31.80.
His best figures for the Club were 5 for 124 which came in a match against Kent on the final day of the 2016 season as Essex were crowned the Specsavers County Championship Division Two title winners.
Dixon spent time on loan at Durham earlier this season but has found his first-team opportunities limited.
Anthony McGrath said: “Matt has been a great member of the squad and has always been extremely professional both on and off the field.
“Unfortunately he has found game time hard to come by and we have agreed it’s in his best interests to start afresh elsewhere. We’d like to thank him for his commitment and wish him the best of luck for the future.”