I am in US on a J1 visa for alien physician. My current contract is for a total of 1 year, ending June 30, 2011. However, at the time of joining, I was offered a 3 year residency, with visa having to be renewed every year. However, now my contract will not be renewed for a second year, and I have been in US on J1 for only 7 months, is it possible for me to get a waiver of J1 visa and how? Will a waiver be possible if I end my contract now instead of waiting for a year to complete? My fiancé is a US citizen. I am looking for a way so that my fiancé and I would not be separated because of my being on J1

You likely are, but you need to see if you are actually subject to section 212(e), the 2-year home residency requirement. Check your DS-2019, your J-1 visa to see if it says you are subject.

Once you determine you are, you see if you qualify for the waiver, the most common being the "no objection" letter and the hardship waiver for a USC spouse. The I-612 process is convoluted, as it goes to the USCIS first, then to the DOS.

Consult with an experienced immigration attorney. Not many are familiar with J-1 waivers. Check with AILA for a referral.