The Hornets will not confirm which players will not be offered contract renewals this summer but the Watford Observer understands the trio will not get the opportunity to sign new deals.
Youngsters Jonathan North, Lewis Young and Billy Gibson will also be released and Jordan Parkes has also been told he can leave the club despite having another year on his contract.
DeMerit's departure has been expected for some time after the USA international revealed last year he would not open contract negotiations until after this summer's World Cup.
Hornets' boss Malky Mackay said: "Jay is out of contract and financially we are not in a position to offer him a new contract and he has the World Cup.
"Jay also has an awful lot of other things in his life outside football that he is going to think about and even what country he is going to be in next year.
"I don't even think Jay knows what is going to happen after the World Cup yet but he goes with my best wishes."
Watford's financial situation is well-documented and the club are once again cutting the playing budget as they continue to adjust to life outside of the Premier League.
Harley, DeMerit and Hoskins were three of the club's highest earners and Nathan Ellington, who is also on high wages, is expected to remain in Greece for another six months.
But Adrian Mariappa has recently signed a new contract and Watford have also activated one-year extensions with Marvin Sordell, Michael Bryan and Rob Kiernan.
Eustace was the Players' Player of the Year this season and Mackay wants the 30-year-old to stay.
Mackay said: "We are talking to John at the moment and I am hoping John will be here next year.
"He has been an immense part of our season on and off the pitch and he has been a real leader both on and off the pitch.
"We are hopeful we can get something sorted pretty soon."