Chelsea sacked manager Luiz Felipe Scolari on Monday after seven months in charge, saying that results and performances "appeared to be deteriorating at a key time in the season".
A poor run of form culminating in Saturday's 0-0 home draw with Hull City has left Chelsea in fourth place, seven points behind leaders Manchester United having played a game more.
Brazilian Scolari, who led his country to victory in the 2002 World Cup and Portugal to the Euro 2004 final, took over at the start of the season after Avram Grant was sacked.
A statement on the club's website (www.chelseafc.com) said: "Unfortunately the results and performances of the team appeared to be deteriorating at a key time in the season.
"In order to maintain a challenge for the trophies we are still competing for we felt the only option was to make the change now. The search for a new manager has already started and we hope to have someone in place as soon as possible."
Assistant coach Ray Wilkins will take charge on a temporary basis.
"I'm grateful for the opportunity to have worked at Chelsea and in English football," Scolari said in a statement.
"It was a very valuable experience. I'm sorry that it has not been a longer-lasting relationship."
Scolari was the second Premier League manager sacked on Monday following the dismissal of Portsmouth's Tony Adams but despite the growing frustration of the club's fans, his departure came as a surprise.
Chelsea are through to the knockout stages of the Champions League and still in the FA Cup but he has paid the price for months of flat performances and disappointing results.
Bookmakers quickly installed Russia coach Guus Hiddink as favourite to take over, though the Dutchman said he had "nothing to say" about the speculation.
Grant, who took Chelsea to the Champions League final last season, was also short odds for a surprise return.
Scolari started brightly with six wins and two draws from his first eight league games.
But Liverpool won 1-0 at Stamford Bridge in October to end Chelsea's 86-match unbeaten home league run and their form dipped alarmingly with another home loss to Arsenal and a series of uninspiring draws.
Scolari was known as an emotional man during his days as an international coach but, struggling to master English, he was unusually calm on the touchline as Chelsea laboured.
He was unable to get the best out of striker Didier Drogba when he returned from injury and his glittering midfield rarely gelled into a smooth unit.
Scolari's substitutions were also questioned by fans, who taunted him on Saturday with cries of "you don't know what you are doing."
The London club, who won back-to-back titles under Jose Mourinho in 2005 and 2006, slipped further back in the standings when they lost 3-0 to United and 2-0 to Liverpool recently.
"It is a sign of the times. There is absolutely no patience in the world now," United manager Alex Ferguson told MUTV.
"There was great expectation at Chelsea that they were going to do well this year and it is only this last month they have had a bad spell. The judgement really is only on the last month."
Adams and Scolari were the seventh and eighth Premier League managers to leave their clubs this season.
Alan Curbishley, Kevin Keegan and Roy Keane quit West Ham United, Newcastle United and Sunderland, Harry Redknapp left Portsmouth to replace the sacked Juande Ramos at Spurs and Paul Ince was fired by Blackburn Rovers.