McPhee, 29, was scheduled to earn a base salary of $7.2 million in 2018, which was too high for a player with only 14 sacks over three seasons in Chicago. By releasing him, the Bears will open up $7.075 million in salary-cap space.
Demps, 32, played in three games last season before landing on injured reserve with a broken forearm. Demps was due to collect a $500,000 roster bonus on the third day of the league year; Demps' total compensation would've maxed out at $4 million in 2018. The Bears signed Demps to a three-year deal last March.
McPhee played extremely hard on defense, and he was also a forceful and entertaining presence in the locker room. However, he missed 12 games with a variety of ailments, including chronic knee issues, since joining the Bears. He was placed on injured reserve on Dec. 21 after trying to battle through a shoulder injury.
The Bears are looking for a long-term solution at the position opposite Leonard Floyd, the ninth overall pick in the 2016 draft. Floyd had developed into one of the Bears' best defenders in 2017 up until he suffered a knee injury that ultimately required surgery.
Before joining the Bears on a five-year deal that included $15.5 million in guaranteed money, McPhee played four seasons with the Ravens, who selected him in the fifth round of the 2011 draft. Overall, he has 182 tackles, 31 sacks, six forced fumbles and an interception in his seven NFL seasons.
Demps, who intercepted a career-high six passes for the Houston Texans in 2016, was the odd man out in Chicago's secondary after young safeties Eddie Jackson and Adrian Amos emerged as dependable full-time starters in the wake of Demps' season-ending injury in Week 3.