|Ancelotti had said he would have no problem with being sacked by Chelsea [GALLO/GETTY]
Chelsea fired manager Carlo Ancelotti after a 1-0 loss at Everton completed a season which had "fallen short of expectations", the club said in a statement.
"Chelsea Football Club can confirm that Carlo Ancelotti parted company with the club today," a statement on Chelsea's website said on Sunday.
"The owner and board would like to thank Carlo for his contribution and achievements since taking over as manager in July 2009, which included winning the Double for the first time in the club's history.
"However, this season's performances have fallen short of expectations and the club feels the time is right to make this change ahead of next season's preparations.
"Carlo will always be welcome at Stamford Bridge, where he will be given the reception and respect his position in our history deserves.
"Chelsea's long-term football objectives and ambitions remain unchanged and we will now be concentrating all our efforts on identifying a new manager."
Former AC Milan manager Ancelotti had been a popular figure at Stamford Bridge and guided the club to a league and FA Cup double in his first season.
However he paid the price for a mid-season slump which witnessed Chelsea's worst run of league form in nearly 15 years that ultimately wrecked their chances of defending the title.
Ancelotti was the sixth manager of Chelsea owner Roman Abramovich's eight-year reign.
The respected Italian had been hired with the brief of turning Chelsea into European champions but under Ancelotti the Blues exited against Inter Milan in the last 16 last year before being beaten by Manchester United in this year's quarter-finals.
Ancelotti's authority had been undermined by the abrupt dismissal of his assistant Ray Wilkins in November, a dismissal which was followed by a disastrous form slump.
Intense speculation had surrounded Ancelotti's future for several weeks, but he was philosophical when asked about the possibility of being fired last week.
"The club have to judge my job - be objective," he said. "If they decide to change, it's not a problem.
"You won't see me crying or doing something. I will accept the decision of the club and find another 'solution'."
"When I started my experience here in England, if someone had told me that we would win the FA Cup and the Premier League in two years, I'd have been happy.
"In these two years, I have to be happy because the team, last year, was fantastic."