Dugan, who was suspended earlier this week for drinking while in rehabilitation, will be released from the final two years of his contract at the Raiders.
The decision to sack Dugan was voted on by the board was officially announced to the media early in the afternoon by Raiders chief executive Don Furner.
Furner also revealed fellow wayward star Blake Ferguson has been slapped with a $10,000 fine for his part in the now famous Instagram photograph, which showed he and Dugan on a suburban rooftop consuming alcohol.
Furner refused to speculate on whether Ferguson, who has also committed a string of off-field misdemeanours, is on his final warning at the Canberra club.
Rival NRL clubs Penrith and Brisbane on Wednesday night emerged as possible suitors for the Raiders bad boy.
There is also speculation Dugan could be headed for a stint in French rugby league.
NRL chief executive David Smith and ARLC Commissioner John Grant were present at the board meeting.
Furner said he will continue to liaise with the NRL about whether Dugan is allowed to simply take up an offer at another NRL club.
Furner said the club was aware Dugan wouldn't personally front the board meeting on Thursday morning, because he was resigned to his fate.
- with AAP