Former Chelsea midfielder Roberto Di Matteo, who had been working as Villas-Boas's assistant, has been appointed interim manager until the end of the season.
Villas-Boas, who arrived from Porto in June 2011, has paid the price for a dismal run of results that left Chelsea in fifth place and on the verge of elimination from this season's Champions League after a 3-1 defeat at Napoli in the last 16 first leg.
The 34-year-old also had strained relationships with several of Chelsea's senior stars, including England midfielder Frank Lampard, and a woeful sequence -- including just one win in their last seven matches and only three from their last 12 in the League -- forced owner Roman Abramovich to act.
The final straw came on Saturday as the Blues suffered a lacklustre 1-0 defeat at West Bromwich Albion thanks to a late winner from Garth McAuley.
"Andre Villa-Boas has parted company with Chelsea Football Club today," the Chelsea statement read.
"The board would like to record our gratitude for his work and express our disappointment that the relationship has ended so early.
"Unfortunately the results and performances of the team have not been good enough and were showing no signs of improving at a key time in the season.
"The club is still competing in the latter stages of the Champions League and the FA Cup, as well as challenging for a top-four spot in the Premier League, and we aim to remain as competitive as possible on all fronts.
"With that in mind we felt our only option was to make a change at this time.
"With immediate effect Roberto Di Matteo has been appointed first team coach on an interim basis until the end of the season."
Villas-Boas is the sixth manager to be sacked by Abramovich since the Russian billionaire bought the west London club in 2003, with only Guus Hiddink leaving on his own terms after a spell as interim boss.
Abramovich had made several visits to Chelsea's Cobham training ground in recent weeks as the pressure mounted on Villas-Boas.
He was reported to have held an inquest with the manager and his players following a defeat at Everton, which was said to have included attacks on Villas-Boas's tactics from several of Chelsea's stars.
The decision to sack Villas-Boas is a clear sign of Abramovich's concern that Chelsea would miss out on a spot in the Champions League -- they are currently three points behind fourth placed Arsenal -- and reflected the growing belief that the young Portuguese coach was out of his depth.
Abramovich had taken a big gamble when he paid Porto £13.3 million to activate the release clause in Villas-Boas's contract last year.
Although he had earned rave reviews after winning the Portuguese title and Europa League in entertaining fashion in 2011, he had been a manager for less than two years and lacked experience in the spotlight at a European superpower like Chelsea.
His only previous Premier League experience came during a spell as Chelsea's opposition scout under Jose Mourinho.
That lack of know-how was quickly exposed as Villas-Boas struggled to change the team's style of play, while also making a clumsy attempt to begin the process of rebuilding an aging team.
Di Matteo's appointment on a caretaker basis ended speculation Rafael Benitez was in line to take over until the summer.
The Italian will have to act quickly to rebuild morale at Chelsea ahead of Tuesday's FA Cup fifth round replay at Championship club Birmingham.
Chelsea then host Stoke in the Premier League next weekend before the crucial second leg against Napoli on March 14.
Source: AFP
Source: AFP