"The club and player agree that the conclusion reached is in their respective best interests for the future," said a club statement.
Powell was suspended along with teammate Tim Payne after the brawl in a Walkabout pub in Shepherd's Bush on April 19.
Payne has since been cleared to rejoin his teammates but Powell, who was knocked unconscious and required ten stitches after the incident, will now leave the club.
"This announcement comes following a thorough and detailed review, between the player and the club, of all of the evidence arising from the incident for which Andy was initially suspended," continued the statement.
"This included a review of CCTV footage of the incident and statements from those witnesses present throughout.
"Both parties are satisfied that this matter has been dealt with in a proper, fair and appropriate manner and agree that the conclusion reached is in their respective best interests for the future."
Powell is no stranger to disciplinary proceedings having been fined and banned from driving for 15 months after admitting to driving a golf buggy while unfit in March last year.
That resulted in his omission from the Welsh squad for their summer tour but he made his return in the autumn before starting their RBS 6 Nations opener against England in Cardiff.
However a shoulder injury forced him off before half-time in that game and he didn't return with Ryan Jones taking over at No. 8.
And with the emergence of a new generation of Welsh back rowers headed by Sam Warburton, Powell faces an anxious wait to see if this latest setback will count against him when Warren Gatland announces his squad for September's World Cup.