The Giants senior assistant was seen as the obvious successor to Sheedy, if he chose to retire at the end of 2012, but the former Essendon coach was handed a one-year contract extension last week, ending that possibility.
"Mark has made an outstanding contribution to the Giants over the past two years and has been a brilliant teacher to our young players and we want to thank him for everything he has done for our club," Giants CEO David Matthews said.
"He has a young family and we have always said we would not stand in his way should he wish to pursue an opportunity elsewhere and we wish him all the very best for the future."
After throwing his hat in the ring for the vacant Carlton job, Williams now looks set to renew acquaintances with Damien Hardwick next year at the Tigers.
The duo led Port Adelaide to their first ever AFL flag in 2004, Hardwick as a player and Williams the coach, with the former also starting his coaching tutelage at the Power under Williams after retiring as a player.
In what would be a major coup, Williams is believed to have accepted a mentoring and teaching role to oversee Richmond's younger players.Following Brett Ratten's sacking from the Carlton post last week, Williams is thought to have expressed an interest in the role although former Collingwood coach Mick Malthouse hasn't ruled himself out and remains the odds-on favourite.