Garcia left camp without talking to reporters.
"We talked to Freddy and let him know we're going to go in a different direction," said Padres manager Bud Black. "Freddy has had a great career, and I think his intention is to keep pitching ... which is great. He's still motivated to pitch."
In his last start for the Padres, Garcia allowed three home runs in five innings in Saturday's 10-4 loss to the Rockies in Scottsdale.
"I tried to do my job the best I can," Garcia said after Saturday's game. "If I don't make the team, it's all my fault. If I don't make the team, we'll see what happens."
Garcia has amassed a 152-101 career record and a 4.15 ERA in parts of 14 seasons with the Mariners, White Sox, Yankees, Phillies and Tigers.
Had he made the Padres' Opening Day roster, Garcia would have earned $1.3 million. He could have earned another $1.25 million in incentives.
Garcia came to camp with an outside shot of winning a job as the Padres' No. 5 starter. The team also considered him for a long-relief role.
However, he allowed 20 earned runs on 26 hits this spring. He had 18 strikeouts, and opponents hit .299 against him. The team also determined there were better candidates for the staff already in camp.
The Padres will likely open the season with either Tyson Ross or Andrew Cashner as their No. 5 starter. Ross had his scoreless-innings stretch stopped at 15 1/3 innings the last time out.
"We'll continue to work through our pitching staff as we get closer to next Monday [April 1]," Black said.
Corey Brock is a reporter for MLB.com. Keep track of @FollowThePadres on Twitter. This story was not subject to the approval of Major League Baseball or its clubs.