Hughes almost left Meadow Lane in November but his protracted move to Port Vale did not go through before the deadline for loan deals.
The 36-year-old joined the Magpies on a free transfer from Oldham in the summer of 2009 and went on to make 146 appearances for the club, scoring 66 goals during a spell that included winning the League Two title in his debut season.
However, Hughes has found first-team opportunities limited this season.
Director Aileen Trew said of Hughes' departure: "When a player has scored so many goals and become such an icon at a club, it is always difficult to see them leave, especially when they still have something to offer the club.
"I'd like to sincerely thank Lee for the part he has played in bringing success to this club during his time with at Meadow Lane.
"A real character, Hughsey's been a pleasure to work with and to watch on the pitch as he worked his magic with the original Magpies. I'd like to wish Lee and his family all the very best as he moves on to pastures new."
- Sports & Recreation