Carlo Ancelotti has been sacked as manager of Real Madrid after two seasons in charge of the Spanish club.
The Italian, 55, led Real to victory in the Spanish Cup before claiming the club's 10th European Cup last season.
But this year they were knocked out by Juventus in the Champions League semi-finals, while Barcelona won La Liga.
Ancelotti's side finished second in Spain's top flight, two points behind Barca, who have reached the Spanish Cup and Champions League finals.
Club president Florentino Perez told a news conference it had "not been an easy decision" before thanking Ancelotti and adding that a new manager would be appointed "in the coming week".
Real beat city rivals Atletico Madrid 4-1 after extra time in the Champions League final in June 2014 to claim 'La Decima' - their 10th victory in Europe's most prestigious club completion.
It was Ancelotti's third Champions League title as a manager - he also won it twice with AC Milan, in 2003 and 2007 - but he leaves Madrid having failed to claim the Spanish title since joining from Paris St-Germain in July 2013.
In an interview with Italian newspaper Il Giornale published on Monday morning, before his departure was announced, Ancelotti said he would take a year off and have back surgery if he left Real.
"I must have a back operation because of spinal stenosis that for some time creates a tingle in my hands," he said.
"I don't know how long the period of recovery will be," he added. "I can assure you that I've had plenty of offers from Italy, England, Germany. I'm sure they will not be lacking from here until next year."
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