In September, the 47-year-old left the Amex Stadium for Stamford Bridge to succeed Thomas Tuchel, and five of his Brighton & Hove Albion teammates later joined him at the Cobham training facility.
Potter, who committed to a five-year contract with the team, had a successful first nine games at Chelsea.
The Englishman led the Blues to only two victories in nine games after losing 4-1 against his old team. With his back against the wall, Potter suddenly found himself under intense pressure to turn around the club's fortunes.
A statement from the club reads: "Chelsea FC has announced that Graham Potter has departed the club. Graham has agreed to collaborate with the Club to facilitate a smooth transition. 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."
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