"Chelsea Football Club and Jose Mourinho have today parted company by mutual consent," the club said in a statement on their website, confirming earlier media reports.
"All at Chelsea thank Jose for his immense contribution since he returned as manager in the summer of 2013."
Mourinho, 52, led Chelsea to a Premier League and League Cup double last season, but they are currently one point above the relegation zone after nine defeats in 16 games.
Mourinho is reported to have been informed of his fate in a meeting with club officials today afternoon, following two days of talks at boardroom level.
"His three league titles, FA Cup, Community Shield and three League Cup wins over two spells make him the most successful manager in our 110-year history," Chelsea said.
"But both Jose and the board agreed results have not been good enough this season and believe it is in the best interests of both parties to go our separate ways.
"The club wishes to make clear Jose leaves us on good terms and will always remain a much-loved, respected and significant figure at Chelsea.
Juande Ramos, the former Tottenham Hotspur and Sevilla manager, and Dutchman Guus Hiddink have been cited as potential short-term replacements, Hiddink having previously fulfilled the role in 2009.
Pep Guardiola, the Bayern Munich coach, former Chelsea manager Carlo Ancelotti, Atletico Madrid's Diego Simeone and Italy coach Antonio Conte are reported to be possible long- term successors.
"The club's focus is now on ensuring our talented squad reaches its potential," the Chelsea statement added. "There will be no further comment until a new appointment is made."
Mourinho was scathing in his assessment of his players' display afterwards, saying: "I feel like my work was betrayed." With Chelsea having swept to the title by eight points last season, their collapse has baffled pundits.
As well as floundering in the league, they were knocked out of the League Cup on penalties by Stoke City, although they have reached the Champions League last 16, where they will face Paris Saint-Germain.
