Keller's position had come under intense scrutiny after a poor start to the 2014-15 season in which they fell at the first hurdle in the DFB-Pokal, to Dynamo Dresden, but a Champions League draw away to Chelsea lifted spirits in Gelsenkirchen and back-to-back wins over Werder Bremen and rivals Borussia Dortmund eased the pressure on the 43-year-old.
However, after a disappointing draw at home to Maribor last week and defeat at Hoffenheim on Saturday, Keller met with sporting director Horst Heldt on Monday and was relieved of his duties.
Schalke then announced the following morning that Di Matteo, who led Chelsea to Champions League glory in 2012, had been installed as the club's new coach.
"Schalke have parted company with Jens Keller," read a brief statement on the club's official Twitter feed. "Roberto Di Matteo takes over."
Keller initially joined Schalke as the club's Under-17 coach but took charge of the senior squad in December 2012, succeeding Huub Stevens at the helm.
He was given a contract until the end of the season but signed a two-year extension in the summer of 2013.
However, Keller has now paid the price for a run of just two wins from 10 games in all competitions at the start of the current campaign.
Consequently, Schalke have now turned to Di Matteo, who has been without a full-time job since being sacked by Chelsea in November 2012.
The Italian led the Blues to Champions League glory in his then capacity as caretaker coach the season before, with the Premier League outfit overcoming Barcelona in the semi-finals before beating Bayern Munich on penalties in the decider at the Allianz Arena.
However, after being given the job on a permanent basis before the start of the 2012-13 season, he was fired after Chelsea's defence of their European crown was effectively ended by a 3-0 loss to Juventus in Turin.