Luiz, 28, rejoined Aston Villa from Juventus in January on a temporary basis after his loan to Nottingham Forest was cut short earlier in the season.
The move was arranged to provide cover amid injuries to Boubacar Kamara, Youri Tielemans and John McGinn, but Luiz found consistent first-team minutes difficult to secure and fell down the pecking order as Lamare Bogarde and Victor Nilsson Lindelöf were preferred.
He made 20 appearances in all competitions during the second half of the season, contributing one goal. Villa paid his full wages during the loan but were not sufficiently convinced by his contribution to commit to a permanent fee.
The situation is a significant contrast to Luiz's first spell at Villa Park, during which he was one of the most influential players in Unai Emery's system — contributing 11 goals and 11 assists in 2022-23 and winning the PFA Fans' Player of the Season award — before Juventus signed him for £42 million in the summer of 2024.
His two seasons in Turin have been disrupted by injury and inconsistency. The return to Villa, while understandable given the familiar environment, did not produce the form that made his original spell so impressive.
Juventus will reassess their options for Luiz this summer. He has one year remaining on his contract with the Italian club.