The Portuguese boss guided his side to the Premier League title in May, but Monday's loss was their ninth of the campaign, leaving them in 16th place, just a point above the relegation places.
Mourinho, who was ready to open talks over a financial settlement to seal his exit after the defeat at West Ham at the end of October, has now seen his second spell at Stamford Bridge come to an end.
Roman Abramovich could be forced to pay Mourinho more than £40million after the Portuguese manager signed a four-year deal this summer.
Jose Mourinho oversees his final training session in charge of Chelsea before being sacked on Thursday
But, with that deal only a few months old, there is likely to be conflict over the severance package offered by Chelsea.
A club statement confirmed that the club had 'parted company' with their manager, and said results had 'not been good enough'.
'Chelsea Football Club and Jose Mourinho have today parted company by mutual consent,' the statement read.
'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.
'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’s focus is now on ensuring our talented squad reaches its potential.
'There will be no further comment until a new appointment is made.'
It is the second time Mourinho has left Stamford Bridge under a cloud after ending his first spell as Blues boss in 2007.
Mourinho lost support within the Chelsea hierarchy after his bust-up with former club doctor Eva Carneiro during the 2-2 draw with Swansea on the opening day of the season.
Stars of last season’s campaign including Eden Hazard, Nemanja Matic and Cesar Azpilicueta have all come in for fierce criticism from their manager in front of their peers, leading to splits in the camp.
He claimed after the latest defeat - away to league leaders Leicester City - that he felt 'betrayed' by his players, and that he was a victim of his own success last season.
'Sometimes I find myself thinking last season I did an amazing job, brought players to a level not their level. If this is true I brought to such a level they couldn't keep for more than super-motivation to be leading. That is one possibility.'
However, Abramovich decided that the defeat was a step too far, with Chelsea just a point above the relegation zone after 16 games.
Guus Hiddink, who was an interim manager at the club in 2009, is tipped to take over until the end of the season, with Juande Ramos, Brendan Rodgers and Fabio Capello all also linked to the club in a short-term role.
CHELSEA SACK MOURINHO - THE FULL CLUB STATEMENT
Chelsea Football Club and Jose Mourinho have today parted company by mutual consent.
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.
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’s focus is now on ensuring our talented squad reaches its potential.
There will be no further comment until a new appointment is made.
