Bailey, who signed a two-year-deal with the club last summer, made 29 appearances in the first half of the 2017/18 campaign before suffering a knee ligament injury which ruled him out for 13 months.
Following discussions between James and the medical department, the decision was made to cancel the midfielder’s contract to become a free agent.
Also leaving Huish Park is young striker Henry, who is freed to pursue options elsewhere after finding game time limited in Somerset.
The 19-year-old made five substitute appearances for the green and whites after joining in the summer.
All at YTFC wish both James and Korrey all the best for the future.