The team announced the moves shortly after Thursday’s midnight EST deadline. Both players became free agents.
Martin appeared to be a rising star in 2007, when he batted .293 with 19 homers and 87 RBIs. He won a Gold Glove, a Silver Slugger award and made the first of two consecutive All-Star appearances.
But his production has dropped off the past two seasons and he hit only .248 with five homers and 26 RBIs in 97 games this year, when his salary was $5.05 million. A hip injury ended his season Aug. 3.
Sherrill, an AL All-Star in 2008, was acquired from Baltimore in July 2009. The left-hander made $4.5 million last season, when he was 2-2 with a 6.69 ERA in 65 appearances.
The Dodgers also declined to offer a 2011 contract to outfielder Trent Oeltjen.