The team also placed center Russell Bodine, who broke his leg in Sunday's loss to the Miami Dolphins, on injured reserve. Defensive end Mike Love and cornerback Denzel Rice were signed off the practice squad to fill two of the open roster spots.
The Bills acquired Benjamin, 27, in a trade from the Carolina Panthers in October 2017 for third- and seventh-round picks in the 2018 draft. In 18 regular-season games for Buffalo, Benjamin caught 39 passes for 571 yards and two touchdowns.
Benjamin, a first-round pick of the Panthers in 2014, was in the final season of his rookie contract and was scheduled for unrestricted free agency in March. Any team claiming Benjamin off waivers would owe him the remaining portion of his $8.5 million base salary this season. If he is not claimed off waivers, the Bills would owe Benjamin the remainder of his fully guaranteed salary.
Buffalo, which dropped to 4-8 with Sunday's loss, had opted to evaluate younger receivers in recent weeks. Benjamin played between 40 and 58 percent of offensive snaps over the past three games after playing no less than 60 percent of snaps in the first nine games.
In particular, the Bills have leaned toward undrafted rookie wide receiver Robert Foster, who has six catches for 226 yards and one touchdown over the past three games. The Bills also claimed 2017 fifth-round pick Isaiah McKenzie off waivers from the Denver Broncos last month and have given him an opportunity to play.
Benjamin said last month he had hit "rock bottom" this season, which he described as the lowest point of his five-year career.
"It's just a bad season," Benjamin said. "It is what it is. Just football, man. You have good seasons, you have bad seasons. I've had successful seasons in this league. I'll have plenty more. For some reason, it's just not the year."
Some fans in Buffalo criticized Benjamin on social media for his performance this season as well as for a perceived lack of effort that Benjamin had previously disputed. Benjamin said last month he felt "bombarded" and had avoided social media.
"I can't really get on there and really have fun with it no more because they [have] kind of taken the fun out of that," he said. "Just bombarded by the fans and bombarded by the people. The way of our life, I guess, right now."
Holmes, 30, has been used sparingly on offense the past two seasons after signing a three-year, $5.15 million deal during the 2017 offseason. Holmes, who played four seasons for the Oakland Raiders from 2013 to 2016, leads the Bills in playing 70.8 percent of special-teams snaps this season.