Also cut were punter Chris Mohr, among the team's longest-serving players, and offensive lineman Joe Panos.
"Our salary-cap situation has made this is a difficult time for our fans and the organization," Bills president and general manager Tom Donahoe said. "But these are moves that have to be made, and we have to work our way through the problems that currently exist to get our cap into shape and to conform with the league rules."
The team entered the off-season projected to be more than $13 million over the cap -- and that was before re-signing wide receiver Eric Moulds to a six-year, $45-million deal last week.
More cuts are expected in the coming week, while the Bills are also attempting to restructure the deals of players they already have under contract. The team is also in the process of deciding which quarterback -- Rob Johnson or Doug Flutie -- will have to go.
Buffalo radio station WGR 55, quoting unidentified "sources close to Rob Johnson," said Wednesday the Bills plan to release Johnson and make Flutie the starter. An official announcement is not expected until next week, the station said.
Cutting Washington provides the team its biggest cap saving so far. He was scheduled to make about $7.6 million -- including bonus money -- next season. Washington, who completed his sixth season in Buffalo, was cut in part because he refused to take a pay cut for the second straight year.
Panos, who missed all of the 1999 season recovering from a neck injury, played in 13 games last season, none as a starter, and was hobbled by foot and knee injuries. The guard, who spent three years in Buffalo, was scheduled to make almost $4 million next season.
Mohr, 34, was one of three players that have been with the Bills since the 1991 season and is the franchise's all-time leader in career punts and punting yardage.
He was in the final year of his contract, scheduled to make $750,000.
Mohr struggled last season along with the rest of the Bills special teams, which finished worst in the NFL in four categories. Mohr finished averaging 38.5 yards a punt last season, the lowest of his 11-year career.