"While disappointed, particularly given the continued success of Connacht Rugby in recent years, we respect the individual player's decision and wish Mike every success in his future playing career."
McCarthy, 31, took his Ireland caps tally to six during last month's GUINNESS Series, combining well with Munster's Donnacha Ryan in the second row.
To date, he has played 101 times for Connacht in the RaboDirect PRO12 and scored five league tries, including an effort in the away win over Zebre in September.
The London-born forward has been a mainstay of the province's pack during their rise to Heineken Cup rugby.
He has started all nine of their games in the tournament over the past 13 months, including the historic pool victories over Harlequins, Zebre and Biarritz.
Connacht have recently strengthened their squad with the arrival of experienced campaigners like Dan Parks and Nathan White, who together with existing senior players have assisted in the development of a crop of talented indigenous young players.