Di Matteo has become the first top-flight manager to leave his post this season.
He took charge of Chelsea in March after the club had sacked Andre Villas-Boas. Initially Di Matteo took over on a temporary basis.
He rescued the club's ailing Champions League campaign and steered them against all odds to victory over Bayern Munich in the final on the German team's home ground, having already secured the FA Cup.
He was given a two-year contract in June but not before there had been speculation over whether Guardiola would take over.
The season started well domestically but they have fallen slightly off the pace in recent weeks.
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There's been a sharp rise too in rape, burglary and robbery have during what police "busy and challenging time".
Police are looking for a man caught on a security camera before sentimental jewellery and perfume was taken from a pensioner's home.
"All it takes is for somebody to see me - and I could just die, just like that. I could want to go to the shop and not come home."