The Portuguese parted company with the Blues as he started the fourth season of his Stamford Bridge tenure, with director of football Avram Grant and assistant manager Steve Clarke placed in charge of first-team affairs for the time being.
A statement on the club's official website read: "The Chelsea FC plc board and everyone at the club has appreciated your patience and understanding during what has been a difficult time.
"Early this morning we announced that Chelsea and Jose Mourinho had agreed to part company by mutual consent. The key phrase here is that there was mutual agreement. Jose did not resign and he was not sacked.
"What is clear, though, is we had all reached a point where the relationship between the club and Jose had broken down. This was despite genuine attempts over several months by all parties to resolve certain differences.
"The reason the decision has been taken is that we believed the breakdown started to impact on the performance of the team and recent results supported this view. We did not want this to continue or affect the club further.
"Chelsea's long-term football objectives and ambitions remain unchanged and the appointment of Avram Grant and Steve Clarke is aimed at continuing to achieve those goals.
"We also must pay tribute to the great job Jose did for Chelsea. He has been the most successful manager the club has known and he rightly deserves that place in our history.
"Jose has been instrumental in putting Chelsea where it is today, among the leading clubs in European and world football."
