Chelsea release Ray Wilkins
"Chelsea Football Club chief executive Ron Gourlay has announced that the board has decided not to renew Ray Wilkins' contract. This will take effect immediately," read a club statement.
"On behalf of everyone at the club I would like to thank Ray for everything he has done for Chelsea Football Club. We all wish him well for the future," Chelsea chief executive Ron Gourlay said on the club's website.
The 54-year-old, who began his career at Chelsea and made 179 appearances before joining Manchester United in 1979, has been a steadying influence behind the scenes at Stamford Bridge in recent seasons.
He was appointed assistant coach at Chelsea under Luiz Felipe Scolari and briefly took charge of the first team when the Brazilian was sacked in 2009.
Wilkins worked as assistant to Dutchman Guus Hiddink during his short reign and continued in that role when Italian Ancelotti became manager - helping lead Chelsea to last season's Premier League title.
Wilkins, whose career also took in spells with Milan and Rangers, is a fluent Italian speaker and is credited with maintaining strong links between the players and the coaching staff at Stamford Bridge.
Chelsea's website said that Wilkins had not been offered a new contract and that he would leave immediately.