"The club and the NRL will be committed to working with Todd, his family and his management in implementing appropriate counselling and support, with the start of this process to begin tonight."
The NRL said it supported Cronulla's move. Chief operating officer Jim Doyle said the photo tarnished the image of rugby league.
"The overwhelming majority of NRL players are great role models who do such good work on and off the field," he said.
"But those who want to bring the game into disrepute are on notice that their behaviour will not be tolerated and the Sharks should be commended for taking such a strong stand in this instance."
It's the latest incident in the former Dally M medallist's troubled career.
In 2009, he was banned from playing in the NRL because of repeated alcohol-related incidents while at Canberra.
And in 2012, he joined Cronulla after being sacked by the Sydney Roosters for breaking a club-issued alcohol ban the previous year.
Late last night, rugby league great Andrew Johns was adamant that Carney still has a future in the NRL.
Johns, who had earlier said he couldn't see how Carney could be sacked over the photo, believes the disgraced player will likely be picked up another club.
"He is such a good player he will get another chance for sure," Johns said on Triple M.
North Queensland, Canberra and Melbourne are three clubs who have struggled in the halves this year, but whether anyone would want to take a punt on the serial offender remains to be seen.
Super League could be another option for Carney, but British officials rejected a visa application from him in 2009 after he was sacked by the Raiders and deregistered by the NRL.
Salford Red Devils owner multimillionaire Marwan Koukash tweeted after news broke of Carney's departure from the Sharks: "We have no interest in Todd Carney."
- AAP