Chelsea said in a note of condolence on their website that Giuseppe Ancelotti had died on Wednesday night at the age of 87 with his son by his side.
The funeral will be on Saturday and Ancelotti will then return to London for the derby at Stamford Bridge.
Ancelotti's men won their opening five league games of the season, with 21 goals for and just one against, but stumbled when they came up against their first major obstacle at Manchester City in a 1-0 defeat last week.
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