The English Premier League club will pay compensation for ending a contract worth £30 million-a-year six years early.
Chelsea confirmed the deal cut on their official website with a statement:
“Chelsea Football Club can confirm we have mutually agreed with adidas to end our longstanding partnership at the end of the 2016/17 season.
“Having begun our relationship in 2006, we would like to thank adidas for their fantastic support and cooperation over the past 10 years.
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“In that time the club has lifted the UEFA Champions League, UEFA Europa League, two Premier League titles, four FA Cups and two League Cups, and we look forward to a successful final year of partnership.”
Adidas also confirmed the deal cancellation with a statement saying:
“The agreement will now end on June 30, 2017 and not, as originally agreed, on June 30, 2023.
"This mutual agreement on early termination of the agreement will allow Chelsea Football Club to enter a new equipment agreement with a competitor of adidas AG.
"It will allow adidas AG to continue to implement its sports sponsorship strategy as set out in its strategic business plan ‘Creating the New’. Under this plan, adidas AG will partner with fewer assets on a team level.
"As compensation for the early termination of the contract, the adidas Group will receive a payment from Chelsea Football Club in 2017 that will already positively impact the Group’s net income this year."