Chelsea sacked Roberto Di Matteo on Wednesday just hours after their Champions League defeat to Juventus.
The club have reacted swiftly to the 3-0 loss in Italy on Tuesday night which took their hopes of reaching the last 16 out of their hands, and put them at risk of becoming the first holders to fail to reach the subsequent knockout phase.
The Blues have also failed to win any of their last four Premier League games, a run which has seen them slip from top to four points behind leaders Manchester City.
A club statement read: "Chelsea Football Club has parted company on Wednesday morning with manager Roberto Di Matteo.
"The team's recent performances and results have not been good enough and the owner and the board felt that a change was necessary now to keep the club moving in the right direction as we head into a vitally important part of the season."
The statement continued: "The club faces a difficult task ahead in qualifying for the knockout stages of the Champions League as well as maintaining a strong challenge for the top of the Premier League while competing in three other cup competitions. Our aim is to remain as competitive as possible and challenge strongly on all fronts.
"The owner and the board would like to thank Roberto for all he has done for the club since taking over in March. Roberto helped guide us to an historic Champions League victory and a seventh FA Cup. We will never forget the huge contribution he has made to this club's history and he will always be welcome at Stamford Bridge.
"The club will be making an announcement shortly regarding a new first team manager."
Immediate attention will turn to whether the club can lure former Barcelona coach Pep Guardiola out of a year-long sabbatical from football.
Guardiola was a reported target for the Blues in the summer despite Di Matteo's Champions League and FA Cup success.
He had vowed to take a year's break from the game, but he is likely to be the favourite to succeed Di Matteo on a permanent basis.
Di Matteo took charge of Chelsea in March after the club had sacked Andre Villas-Boas, initially on a temporary basis.
He rescued the club's ailing Champions League campaign and steered them against all odds to victory over Bayern Munich in the final on the German team's home ground, having already secured the FA Cup.
He was given a two-year contract in June, but not before there had been major speculation over whether Guardiola would take over.
The season started well domestically but they have fallen slightly off the pace in recent weeks. Di Matteo has become the first top-flight manager to leave his post this season.
While Di Matteo may not have expected Tuesday night's defeat would lead to his departure, he did accept that any blame for it should be laid at his door.
"I'm responsible for the result. I'm responsible for the performance. It's a negative evening for us.
"If anyone has to take the blame, it's me. I selected a team I was convinced was the right team to win against Juventus, or get at least a draw, so the blame belongs to me."
He added: "I'm responsible for positive and negative results. This is what I do."
Di Matteo took more than an hour to emerge for his post-match press conference but he said that was not because he had been grilled by senior club executives.
Asked at the time if it would be unfair to sack him given all he had achieved last season, he said: "I'm the wrong person to answer that question."
He added: "At the moment, I think, with the team, we are all in it together.
"At the moment, I am here and I think I will be for the future. As far as I'm concerned, I'll keep working."

Former Liverpool manager Rafael Benitez quickly declared an interest in the vacant position at Stamford Bridge.
When asked by Sport360 if an approach had been made, he said: "You ask directly, I cannot answer directly.
"In football a lot of people are talking so we will see what happens in the next few days. I am looking for a club that can challenge for trophies and Chelsea is one of these clubs.
"I have to talk with my agent and see what he has been doing the last couple of days. But I am just trying to go to a team that can win."
Benitez, 52, won the Champions League with Liverpool in 2005. He left the Reds in 2010 and went on to briefly manage Inter Milan.
Bookmakers have installed him as one of the favourites to take over at Chelsea, along with former Barcelona manager Pep Guardiola and ex-Spurs boss Harry Redknapp