The Magpies have formally split with Hill, cutting short the 26-year-old's bumper contract that had been due to expire at end of 2030.
"I'm going to take a break from football to keep working on myself and regain my passion for the game," Hill said in a statement released by the Magpies on Friday.
Hill was the star of Collingwood's 2023 premiership under coach Craig McRae, winning the Norm Smith medal for a four-goal grand final showing against Brisbane.
But having taken stretches of personal leave, he hasn't played at AFL level for almost a year - making just three VFL appearances in 2026.
Hill on Thursday, before the Pies lost to Geelong at the MCG, shared on Instagram a vile direct message from a Collingwood supporter that included a racist slur among other insults.
"You have disappointed this whole club and it's (sic) 100 thousand plus fans what you have done the last 18 months," the account also posted.
"... I hope nothing but the worst for you."
Hill posted a screenshot of the message and captioned it "anyone know this tough guy?"
The Magpies have publicly supported Hill throughout his turbulent period and McRae again expressed his care for the forward's wellbeing - and disgust at those posting abusive comments on social media.
"Bobby, our thoughts are with you," McRae said after the MCG defeat on Thursday night.
"Not just for Bobby - what's going on? It's a crazy place at times, isn't it?
"I don't do social media, so bear with me, but I did look on to a website which had feedback, and the feedback is unbelievable.
"It's just a cesspool for people just to vent. I find it fascinating that's actually something that people would be interested in.
"If Bobby's listening there, I'm sorry to hear that's the case. We'll always love him. It's sad to hear that."
On Friday morning, the Pies' football manager Charlie Gardiner confirmed the end of Hill's contract.
"The club has been working with Bobby over the past 12 months to put support structures in place to help him work through some personal matters," Gardiner said in a statement.
"Despite this, Bobby has unfortunately struggled to meet his commitments to the club consistently this year and agreed that taking a break from football is the best decision for him and his family."
Meanwhile, the Magpies are counting the cost of Thursday night's loss with veteran defender Jeremy Howe suffering a fractured arm.
It is the same arm that he broke horrifically after a nasty landing from an aerial contest, also against Geelong, in 2023.
"The likelihood is he'll probably need an operation," McRae said post-game.
Utility Harry Perryman suffered a left hamstring injury - having strained his right hamstring earlier in the season.
And Brownlow medal favourite Nick Daicos has a bruised right foot, but he played out the game.
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