His departure comes seven months after he led them to the Premier League title.
It was the Portuguese coach’s second spell at the club, taking charge in June 2013. He previously was at the helm from 2004-07.
“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. His legacy at Stamford Bridge and in England has long been guaranteed and he will always be warmly welcomed back to Stamford Bridge,” the club said in a statement.
Chelsea won the Premier League and the League Cup last season, but have lost nine of their 16 league games so far and are 16th in the table, one point above the relegation places.
“All at Chelsea thank Jose for his immense contribution since he returned as manager in the summer of 2013.”
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. 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.”
Mourinho’s final match was Monday’s 1-2 defeat at leaders Leicester City on Monday.
Several high-profile names including Pep Guardiola, Guus Hiddink, Brendan Rodgers and Juande Ramos have all been touted as possible successors.
“The club’s focus is now on ensuring our talented squad reaches its potential. There will be no further comment until a new appointment is made,” the statement added.