Carlo Ancelotti has been fired as manager of Real Madrid, club president Florentino Perez announced on Monday.
After winning the Champions League in his first season in charge, Ancelotti failed to claim any major trophies in 2014-15, leading the club to announce his departure two days after the end of their campaign.
"My talk will be very short, but I want to say that today the board has decided to relieve Carlo Ancelotti of duties as Real Madrid coach," Perez said at a news conference. "It has been a very difficult decision to make for the board.
"But we are not here to make easy decisions, but to make those which are best for an institution that is globally recognised."
Perez also said Real Madrid would announce Ancelotti's replacement "next week."
Fans applauded Ancelotti before the 7-3 win against Getafe on Saturday, and Cristiano Ronaldo wrote his support for Ancelotti on social media, but it was not enough for the Italian to keep his position at the Bernabeu with one year remaining on his contract.
Great coach and amazing person. Hope we work together next season. pic.twitter.com/HqHHGjGGUH
- Cristiano Ronaldo (@Cristiano) May 23, 2015
Ancelotti arrived at Madrid in the summer of 2013 and went on to secure the club's long-awaited Decima -- their 10th European Cup -- as well as the Copa del Rey during his first season.
In his second campaign, the Italian landed the UEFA Super Cup in August and the FIFA Club World Cup in December. He also guided the team to a club-record 22 consecutive victories, but ultimately failed to claim a major trophy this spring.
Perez thanked Ancelotti for his efforts over the past two years.
"Ancelotti has won, in these two years, the affection of me personally, the board and the fans. He forms part of our history as the coach with whom we won the Decima," Perez said.
"The demands for a coach here are huge and I think the time has come for a change. We have a great club and we know that their talent and hard work will bring happiness again to our fans and socios."
Perez would not reveal exactly why he felt Ancelotti was no longer the right man for the job, but said he and the board had felt the "responsibility" to make a change.
"I am not going into details [on what went wrong]," he said. "We have analysed everything, from all points of view. This position [as president] is not an easy one, and if we have the view a new impetus is needed, we have responsibility to make the decision.
"We make this reflection every year, after the season has ended. This has been a decision analysed over the whole year, but made in the last week."
The president did say that the turnover rate at Madrid was not so different from at other big clubs where the demands are huge.
"There is nobody guilty," Perez said. "The job of Real Madrid coach is one where you suffer a lot over time. I remember in [Jose] Mourinho's third year, he was the coach who had spent the most time [in the job].
"I have heard that there have been many coaches at Madrid. But this also happens at Atletico Madrid, Barcelona, Chelsea, Bayern Munich, Juventus."
Recent comments from Madrid players including Ronaldo and Sergio Ramos in support of Ancelotti staying had not bothered the club's hierarchy, Perez said.
"I am not annoyed at the comments," he said. "Any time someone leaves Madrid, whether player or coach, there will be relationships of friendship. I am not annoyed but see them as normal gestures of affection from players to their coach."
Napoli manger Rafa Benitez has been reported as the front-runner to replace Ancelotti, with his agent saying his client would be "delighted" to take the Real Madrid job.
Other names touted by local media to replace Ancelotti include departing Borussia Dortmund boss Jurgen Klopp, Germany manager Joachim Low, Sevilla's Unai Emery and ex-Madrid player and former Sevilla and Olympiakos coach Michel, as well as one-time superstar and current Madrid youth team boss Zinedine Zidane.
Asked what Real Madrid will look for in a new manager, Perez said: "I don't know what it is, but after two years and given the excellence required at Real Madrid, it is time to push for something new so that we can reach our maximum competitive level.
"Now is not the time to talk about this. [But] of course it would be good for the Real Madrid coach to speak Spanish."
Reports have linked Ancelotti with a return to AC Milan, where he won two Champions League titles, and the Italian club's general manager Adriano Galliani was flying on Monday to Madrid, where he was expected to hold talks with Ancelotti.
However, Ancelotti said before his sacking that he would take a year off to recover from impending back surgery if he were relieved of his duties at Real Madrid.
"It will be a pleasure to have him for dinner, but I can't change my plans," Ancelotti said of Galliani's visit. "It's already set in stone. I'm going to spend time relaxing, between Madrid and Canada. Because these two years with Real have been very tiring, believe me, and particularly challenging.
"Nobody can imagine how much it takes out of you, in terms of energy and your nervous system, to coach Real. Then I'll be going home for another event -- in a month's time, my grandchild will be born. It's an event I can't and don't want to miss."
I'd like to keep in mind this two fantastic years at Real Madrid. Thanks to the club, the supporters and my players. #HalaMadridYNadaMas
- Carlo Ancelotti (@MrAncelotti) May 25, 2015
Ancelotti, 55, added that he has been inundated with offers, but that his decision has been made. He hugged his players after their final league game of the season at the weekend, suggesting he already knew that he no longer had a future with Real.
"I thanked them one by one with a hug and a few select words," he said. "I can assure you that I'm not lacking offers: from England, Italy, Germany. And I'm sure I'll be getting plenty in the years to come also."
Perez said that Ancelotti was leaving on good personal terms with his former employers.
"Before coming here I was with Carlo Ancelotti, talking to him," he said. "He is a gentleman and understood everything completely. He leaves with good relationship with all of us. Your professional relationship is one thing, your personal relationship another."