The 29-year-old Davey played 100 games for the Bombers and most recently represented the Indigenous All Stars on their Ireland tour.
Davey was a popular figure at Essendon and list manager Adrian Dodoro said on Wednesday it was a tough call to cut him.
"As a highly respected member of the Essendon playing group it's sad to see 'Froggy' depart the club," Dodoro said.
"Unfortunately at this time of year we have to make tough decisions about our playing list and this is one of them."
"To play 100 games and kick 120 goals over seven seasons as a small forward is a terrific effort and we wish Alwyn and his young family all the best for the future."
It is unclear whether Davey will try to continue his AFL career.
Essendon recruited him with pick 36 in the 2006 national draft and he made his senior debut the following season.
His older brother Aaron also retired from the AFL in late August after a 10-year, 178-game career with Melbourne.
The AFL career of Tambling could also be over after the one-time high draft pick was delisted by Adelaide.
The Crows axed Tambling and utility Aidan Riley, while upgrading rookies Rory Laird and Kyle Hartigan to their senior list on Wednesday.
Tambling was chosen by Richmond with pick number four at the 2004 national draft, ahead of Hawthorn-turned-Sydney forward Lance Franklin.
But Tambling's career never reached lofty heights and he was traded by Richmond to Adelaide at the end of 2010.
Tambling, now aged 27, played 16 games in three injury-interrupted seasons in Adelaide, for a career tally of 124 AFL matches.
Riley, 21, played 10 games overall but broke a leg in 2013.
"Richard and Aidan have both been hampered by injuries, which have affected the continuity of their football," Adelaide's list manager David Noble said in a statement on Wednesday.
Noble said former basketballer Ben Dowdell, who spent two years on Adelaide's alternate talent rookie list, also wouldn't be offered another contract.
And Richmond has also delisted Robin Nahas, Steven Verrier and Tom Derickx on top of the experienced with McGuane while Shane Tuck and Sam Lonergan retired at the end of the season.