Widespread reports emerged on Monday that the Blues were set to dismiss Lampard after a run of two wins in eight Premier League games left them ninth, 11 points off the pace.
Confirmation soon followed, bringing to an end Lampard's 18-month reign back at the club where he remains the all-time record goalscorer, with former Paris Saint-Germain boss Thomas Tuchel expected to be appointed as his successor.
Chelsea statement did not comment on Tuchel's potential arrival but read: "This has been a very difficult decision, and not one that the owner and the board have taken lightly.
"We are grateful to Frank for what he has achieved in his time as head coach of the club. However, recent results and performances have not met the club's expectations, leaving the club mid-table without any clear path to sustained improvement.
"There can never be a good time to part ways with a club legend such as Frank, but after lengthy deliberation and consideration it was decided a change is needed now to give the club time to improve performances and results this season."
Owner Roman Abramovich added: "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 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."