The London club made their announcement via their official website this afternoon, bringing to an end weeks of speculation over the Israeli's future.
A statement read that the decision was taken after two days of intense discussion, with owner Roman Abramovich and the board apparently losing patience after a season without success in the Premier League or Champions League.
Grant, 53, arrived at Stamford Bridge in September of last year after José Mourinho's departure. Having bossed the Israeli national side, as well as a host of domestic teams, his experience was considerable, but lacked the top-level edge that many fans in west London had grown to expect. What's more, a lack of official UEFA qualification put him in a difficult situation.
Nonetheless he was able to guide the Blues both to the CL final in Moscow and to second place in the Premier League, losing the former game on penalties and the latter competition by a narrow margin.
However, it has been clear for some time that a trophyless season, however close-fought, would not be tolerated, and thus Grants departure comes as no real surprise.
The Search Is On
The second part of Chelsea's official communiqué pertained to the need to find a replacement. It read: "We will now be concentrating all our efforts on identifying a new manager for Chelsea and there will be no further comment until that appointment is made."
The likes of Frank Rijkaard, former Barcelona boss, have been linked with the vacant hotseat, but there are also rumblings in the English tabloid press that José Mourinho could be set for a surprise (and highly unlikely) return.
Steve Michaels, Goal.com