The club legend was appointed manager in the summer of 2019 but has now been sacked following a run of poor results.
Lampard led Chelsea to qualify for the UEFA Champions League last season, however, failed to move the team to the next level despite heavily investing in the squad.
In a statement, Chelsea owner Roman Abramovich said it was difficult to sack Lampard due to the excellent personal relationship between the two.
"This was a very difficult decision for the Club, not least because I have an excellent personal relationship with Frank and I have the utmost respect for him,” he said, as quoted by Sky Sports.
"He is a man of great integrity and has the highest of work ethics. However, under current circumstances we believe it is best to change managers.
"On behalf of everyone at the Club, the Board and personally, I would like to thank Frank for his work as Head Coach and wish him every success in the future. He is an important icon of this great club and his status here remains undiminished. He will always be warmly welcomed back at Stamford Bridge."
Lampard departs with Chelsea sitting in ninth position on the Premier League table and 11 points behind leaders Manchester United.
Meanwhile, widespread reports suggest the Blues hierarchy has also lined up former PSG boss Thomas Tuchel as Lampard's replacement.