Release sign put round sides of tug (3,2)
I believe the answer is:
let go
'release' is the definition.
('let go' can be a synonym of 'release')
'sign put round sides of tug' is the wordplay.
'sign' becomes 'leo' (Leo is an example).
'put round' is an insertion indicator.
'sides of' says to hollow out the word (remove centre letters) (only the letters on the sides remain).
'tug' with its centre taken out is 'tg'.
'leo' going around 'tg' is 'LET GO'.
(Other definitions for let go that I've seen before include "Give up" , "Discuss no further - dismiss - release" , "Set at liberty, loose grip on" , "Relinquish one's grip" , "Release - relax one's grasp" .)