The 52-year-old Portuguese had been in his second spell at the club,taking charge in June 2013.
Chelsea finished eight points clear last season and won the League Cup, but have lost nine of their 16 league games so far and are 16th in the table, one point above the relegation places.
He won three Premier League titles, two of those in his first spell between 2004 and 2007.
The Portuguese has also won the FA Cup, in 2007, and the League Cup three times - in 2005, 2007 and 2015.
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