It was the Englishman’s 11th defeat in 31 games since replacing Thomas Tuchel at Stamford Bridge on 8 September.
Chelsea, who have spent more than £550m on new players, are searching for their third manager of the season.
The Blues are in the bottom half of the Premier League after their latest loss – and 12 points off the top four.
Chelsea say Potter “has agreed to collaborate with the club to facilitate a smooth transition” and that Bruno Saltor will take charge of the team as interim head coach.
In a statement, co-controlling owners Todd Boehly and Behdad Eghbali said: “We have the highest degree of respect for Graham as a coach and as a person.
“He has always conducted himself with professionalism and integrity and we are all disappointed in this outcome.”
Chelsea host Liverpool in the Premier League on Tuesday and face Real Madrid in the first leg of their Champions League quarter-final on 12 April