Despite Chelsea being linked with several managers, Conte refused to step down from his post.
The former Juventus coach won the Premier League title in his first season, but that initial success was soured by an off-the-field power struggle over the club's transfer policy.
Chelsea's Italian head coach Antonio Conte gestures on the touchline during the English Premier League football match between West Ham United and Chelsea at The London Stadium, in east London on December 9, 2017.
Cesc Fabregas and John Terry sent messages of support to Conte before the club's official announcement, thanking the coach for creating special memories at the club.
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Croatia , in their first semi since 1998, levelled through Ivan Perisic after 68 minutes and then looked the more unsafe side. Liverpool 's Lovren is set to come up against Tottenham Hotspur 's Harry Kane when Croatia and England meet on Wednesday.
After winning the title in his first season in charge, Conte has fallen out with the Chelsea board this term and bemoaned the deficiency of world-class signings in his squad.
The agreement with Chelsea now looks to have been finalised, with Conte's exit paving the way for Sarri to take over at Stamford Bridge.
Conte departs a year before his contract was due to expire and will now be in line for £9million in compensation.
Despite being axed by Napoli, Sarri remained under contract with the club and they have been seeking a compensation figure from Chelsea to allow him to join the Blues.
The appointment of Sarri could help Chelsea land Napoli's Jorginho.