He was dismissed just seven months into a three-year contract thought to be worth £6.25m a year.
The Brazilian was dismissed with immediate effect, and Chelsea are now seeking their fourth manager in less than 17 months.
With Scolari following Avram Grant and Jose Mourinho out of the club, it could reportedly take the total paid to sacked coaches during that time to £40m.
Scolari is the eighth Premier League manager to leave this season after Tony Adams was fired by Portsmouth.
The Brazilian has told of his regrets after being sacked, saying: "It was a very valuable experience. I am sorry that my time with everyone could not last longer.
"I wish Chelsea luck in the three competitions it is participating in. I want to take the opportunity to inform that I will keep living in London."
The club said in a statement: "Unfortunately the results and performances of the team appeared to be deteriorating at a key time in the season.
"In order to maintain a challenge for the trophies we are still competing for we felt the only option was to make the change now."
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