The Blues finished sixth in the Premier League thanks to a fine run towards the end of the season but missed out on Champions League qualification and a trophy.
"Chelsea FC can confirm that the club and Mauricio Pochettino have mutually agreed to part ways," Chelsea said in a statement.
In just two years under the ownership of an American consortium fronted by LA Dodgers co-owner Todd Boehly and private equity group Clearlake Capital, Chelsea have spent over £1 billion ($1.3 billion) on new players.
The vast majority of that was spent on rising stars and Pochettino pointed to a lack of experience and a lengthy injury list for failing to achieve consistent results.
Chelsea lost the League Cup final 1-0 to Liverpool after extra-time and pushed Manchester City all the way before losing in the FA Cup semi-finals by the same score.
But there had been signs that Pochettino's project was coming together in a run of five consecutive wins to end the campaign that ensured Chelsea will be in Europe next season.
They will qualify for the Europa League if Manchester United lose to City in the FA Cup final and the Conference League if the Red Devils shock the English champions.
"Thank you to the Chelsea ownership group and sporting directors for the opportunity to be part of this football club's history," said Pochettino.
"The club is now well positioned to keep moving forward in the Premier League and Europe in the years to come."
Chelsea sporting directors Laurence Stewart and Paul Winstanley said: "On behalf of everyone at Chelsea, we would like to express our gratitude to Mauricio for his service this season.
"He will be welcome back to Stamford Bridge any time and we wish him all the very best in his future coaching career."
Four managers in two years
Pochettino is the fourth manager to depart under Boehly's regime after Thomas Tuchel, Graham Potter and Frank Lampard.
According to the Daily Telegraph, Pochettino met Boehly for dinner on Friday before his departure was confirmed after an end-of-season review with Stewart and Winstanley.
The 52-year-old arrived in west London with the task of getting Chelsea back on track after they finished 12th in the 2022/23 Premier League season.
The Argentine had to bed in another influx of new signings as Chelsea broke the British transfer record to buy Moises Caicedo for £115 million.
He suffered a difficult start as they won just three of their opening 10 Premier League games.
But led by the stunning form of Cole Palmer, only City, Arsenal and Liverpool picked up more points than Chelsea in the second half of the season.
According to reports Stuttgart's Sebastian Hoeness, Girona boss Michel, Ipswich Town's Kieran McKenna and Enzo Maresca of Leicester are among those in contention to be next in the Stamford Bridge hot seat.
Pochettino began his coaching career at Espanyol before shining in a short spell at Southampton.
That earned him a move to Tottenham, where he established Spurs as regulars at the top end of the Premier League and took the club to a first ever Champions League final in 2019.
Pochettino was sacked by Tottenham just months later before joining Paris Saint-Germain in 2021, where we won one Ligue 1 title and French Cup in 18 months in charge.
