Real Madrid have sacked Carlo Ancelotti a year and a day after he won the club its 10th European Cup.
Florentino Perez confirmed the decision to fire his ninth coach in 12 years as president at a press conference on Monday night, but stopped short of naming Rafa Benitez as the club's new manager.
The former Liverpool boss remains favourite to take charge but the news of Ancelotti's dismissal has not been well received by players and fans.
Carlo Ancelotti has been sacked by Real Madrid after overseeing a trophyless season at the Bernabeu
A meeting with the club's board was held on Monday to discuss Ancelotti's future with Real Madrid
Real Madrid president Florentino Perez announced on Monday evening that Ancelotti had been sacked
Perez confirmed the decision to fire his ninth coach in 12 years as president at a press conference
Perez appears to be stalling over a decision on Ancelotti's replacement, and told reporters at the Bernabeu: 'We will name the new coach next week.'
When Perez emerged, he said: 'I want to tell you that we have decided to relieve Carlo Ancelotti.
'This has been, as you can imagine, a very difficult decision for the board but as always we have not come here to Real Madrid to take the easy decisions but the best decision for the institution.
'Carlo is now part of our history. The manager won La Decima. As we all know, at Real Madrid the demands are maximum and we think it is time for a new impulse. A new impulse which can allow us to win titles and achieve a maximum level of competition.
'With our great team, talent, and hard work, we will be able to give satisfaction and happiness to our fans and our members. I want to publicly say thank you to Carlo Ancelotti for these two years, for his hard work and all his affection, and tell him this is still his house and his home.
'Next week, we will know the name of the new manager of Real Madrid.'
Ancelotti had received support from his players before his sacking. Cristiano Ronaldo tweeted on Saturday night: 'Great coach and amazing person. Hope we work together next season.'
After their last game of the season ended in a 7-3 win for Madrid over Getafe, midfielder James Rodriguez added: 'It will be hard to take but I am just a player and it is not up to me.'
The 55-year-old plans to take a year off to undergo back surgery, but there will be no shortage of clubs trying to persuade Ancelotti to change his mind with West Ham and Liverpool linked.
Cristiano Ronaldo urged the Madrid club not to sack Ancelotti with this Twitter post recently
Ancelotti said he has had offers from clubs in England, Italy and Germany as his future was in the balance
Ancelotti would have been dismissed last year had he not won the Champions League in extra-time, but he survived after a 90th-minute equaliser from Sergio Ramos and goals from Gareth Bale, Marcelo and Ronaldo.
This year the powers that be at the Bernabeu have been unhappy with the physical condition of the players, and the president is understood to have given Ancelotti an ultimatum: change your back-room staff or lose your job.
Unwilling to break up the tight group of assistants he has worked with for the last 18 years, in favour of a younger more dynamic coaching team hired by the club, Ancelotti was given his marching orders along with 58-year-old fitness coach Giovanni Mauri and 66-year-old goalkeeping coach Viliam Vecchi.
His English assistant Paul Clement had already said his goodbyes ahead of taking the now-vacant Derby County job. What remains to be seen is who comes in to replace the man who won the biggest domestic prize of all.
Real Madrid ended their season with an emphatic 7-3 win over Getafe but that could not save Ancelotti
Ronaldo (second from left) celebrates with his team-mates during their 7-3 win in their season finale
Benitez still looks set to rejoin the club he served as a youth team player and coach more than 20 years ago. He had been very close to accepting a £6million-a-year, two-season deal to take over at West Ham, but has only had one job in mind since being told by his agent Manuel Garcia Quilon that Madrid wanted him.
Supporters have been as unconvinced as players with only seven per cent of 30,000 polled by Spanish newspaper Marca in favour of his appointment.
Borussia Dortmund coach Jurgen Klopp emerged as the people's favourite but he speaks no Spanish and is seen as too much of a maverick by the Real board.
Madrid also like Valencia coach Nuno Espirito Santo, and his close links to super-agent Jorge Mendes.
Rafa Benitez is likely to replace Ancelotti at Real Madrid with the club to announce their appointment soon
Jurgen Klopp has been linked with the job at Real Madrid but is seen as a maverick by the board
Ancelotti has been linked with a return to former club AC Milan but he insists he will take time off
Ancelotti has been sacked by Real Madrid after leading the club on a trophyless season at the Bernabeu
They admire Sevilla coach Unai Emery, who could win back-to-back Europa Leagues on Wednesday. He also has his supporters within the club and that support will multiply if he lifts the trophy in Warsaw.
As well as a healthy relationship with the president, Benitez is close to his right-hand man, Jose Angel Sanchez, and the club will look for him to show a strong hand in a dressing room dominated by Ronaldo, Sergio Ramos and Iker Casillas, if he is installed next week.
Casillas should be replaced as first-team goalkeeper by David De Gea, who Madrid hope will be the new coach's first signing. Perez added: 'Carlo is a gentleman and he now forms part of the club's history after winning the Champions League last year.'
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