Potter had been signed by Chelsea's new ownership in September after they prised him away from Brighton & Hove Albion but the Englishman lasted 31 games, winning only 12 before the owners pulled the trigger.
His last game in charge was Chelsea's 2-0 league loss at home to Aston Villa on Saturday.
"Graham has agreed to collaborate with the club to facilitate a smooth transition," Chelsea said in a statement.
"In his time with the club, Graham has taken us to the quarter-final of the Champions League, where we will face Real Madrid. Chelsea would like to thank Graham for all his efforts and contribution and wish him well for the future.
"Bruno Saltor will take charge of the team as interim head coach."
Potter came under criticism after he failed to get the best out of a squad that had been reinforced over two transfer windows as owners Todd Boehly and Clearlake Capital spent over 600 million euros on new players.
