Stefano Pioli has been sacked as head coach of AC Milan two years after guiding them to the Serie A title, the Italian giants announced on Friday.

AC Milan said in a statement that Pioli, who was under contract until 2025, "will be departing after the end of the current season, after having been in charge of the First Team since October 2019".

They will finish second this season but way behind city rivals Inter, who to rub salt into the wounds clinched the title by beating Pioli's team 2-1 at the end of April.

Pioli was hailed a hero in 2022 after delivering the once dominant force in Italian football their first league title since 2011.

He also guided them to last season's Champions League semi-finals -- the first time they had gone that far since the 2006-2007 campaign -- where they lost to Inter.

However, an early exit from the Champions League this term and failure to run Inter close in the title race set the alarm bells.

According to reports in the Italian media, Paulo Fonseca, the Portuguese coach who has been in charge of French club Lille for the last two seasons, is in line to take over.

The Milan board paid a warm tribute in the farewell statement to 58-year-old Italian Pioli.

"AC Milan extends heartfelt thanks to Stefano Pioli and his entire staff for... securing an unforgettable League title and re-establishing AC Milan's consistent presence in the top European competition," read the statement.

"Stefano's professionalism and human touch have significantly contributed to the growth of the squad, embodying the Club's core values from day one."

Pioli, who numbers Lazio and Inter among the clubs he has formerly managed, thanked the club and praised the "unwavering dedication" of its supporters.

Stefano Pioli expressed his gratitude to AC Milan "for the opportunity to be part of the history of this glorious Club," read the statement.