The London team, owned by Russian billionaire Roman Abramovich, is currently fourth in the English Premier League.
"Luiz Felipe Scolari has been dismissed as manager of Chelsea Football Club with immediate effect," a statement on the club's website read.
"Felipe has brought many positives to the club since he joined and we all feel a sense of sadness that our relationship has ended so soon. Unfortunately the results and performances of the team appeared to be deteriorating at a key time in the season," it went on.
Brazilian manager Scolari, who took his country to their 2002 World Cup triumph in Germany, was named in June as a replacement for Avram Grant.
Chelsea drew 0-0 at home with Hull on Saturday, a week after losing 2-0 away to rivals Liverpool.
The sacking was the second in as many days in the Premier League after Portsmouth dismissed their manager, former Arsenal defender Tony Adams, on Sunday.