The League One club began an investigation after images appeared on social media of posts in a private chat following England’s Euro 2020 final defeat by Italy earlier this month.
All members of the squad were suspended while the probe was ongoing and those found not to be involved had been allowed to return to training last week.
The three players who have been released will have the right to appeal the club’s decision.
A club statement said: “Portsmouth football Club can confirm that the investigation – and subsequent disciplinary process – into discriminatory messages that originated from an academy U18 private group chat has now concluded.
“Portsmouth football Club are fully committed to the elimination of all forms of discrimination.
“We also continue to respectfully appeal for everyone’s consideration in their use of social media posts directed towards any of the club’s employees and any other external parties.”
Marcus Rashford, Jadon Sancho and Bukayo Saka missed penalties in the shootout which handed Italy their victory at Wembley and were later subjected to racist abuse online.
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