Marco Pezzaiuoli has been placed in charge of Bundesliga side Hoffenheim after Ralf Rangnick left the club "by mutual consent".
The Baden-Wurttemberg club announced the change at a press conference held on Sunday.
The 52-year-old Rangnick has decided to leave after over four years in charge of the club after learning they had sold Luiz Gustavo to Bayern Munich on Saturday - a decision he did not agree with.
The former Schalke and Hannover coach made it clear before the winter break that such a transfer would be "the wrong signal" and that he would not accept it. However, the club's owner Dietmar Hopp and general manager Ernst Tanner went ahead and sanctioned the transfer.
According to a statement on the club's website, the "expectations of the coach and those of the club regarding the future sporting and economic development of Hoffenheim were diverging".
However, Hopp today thanked Rangnick for his work and wished him well for the future.
"The unique success of marching through to the Bundesliga will remain strongly linked with the name of Ralf Rangnick," he said.
"After completing our 'Bundesliga project' after only two years, it is absolutely understandable that Ralf Rangnick seeks challenges in different dimensions having reached the boundaries of what a comparably small Bundesliga club with a stadium for 30,000 fans and around 6,000 members can offer him.
"I thank Ralf Rangnick for his amazing achievements in Hoffenheim and the many valuable impulses which will have lasting effects and I wish him lots of success with his next coaching job."
Rangnick took over as coach of Hoffenheim in July 2006 when they were in the third division of German football.
He led them to promotion that year and took them straight through the second division into the top flight at the first time of asking in 2008.
Hoffenheim's first six months in the Bundesliga were a fairytale with the club ending the calendar year at the top of the table with 35 points from 17 games, but a slump in the second half of the season saw them end the campaign in seventh position.
The club consolidated last season with an 11th-place finish and they ended 2010 in eighth position, just four points adrift of fifth-placed Bayern Munich.
Despite the differences over the sale of Luiz Gustavo, Rangnick said he had always enjoyed an amicable relationship with Hopp and Hoffenheim.
"My time at Hoffenheim was dominated by huge sporting success and a constant development of the team and also of individual players," he said.
"Many of them are not only regulars at Hoffenheim but have also become national team players for their respective countries.
"During the years, I have always had a respectful, faithful working relationship with Dietmar Hopp and the club's management.
"We were all pulling in the same direction and always found a way back to each other after any small discrepancy, otherwise what we reached and achieved would not have been possible."
Rangnick is the fourth managerial casualty in the Bundesliga this season after Zvonimir Soldo was sacked as coach of Cologne and both Christian Gross and Jens Keller were fired by Stuttgart.
His replacement Pezzaiuoli joined Hoffenheim in the summer after having worked with the German Football Association as a youth team coach, leading the under-17s to European Championships' glory in 2009.
The 42-year-old will lead the team at an indoor football tournament in Mannheim before jetting out to La Manga with the squad tomorrow to prepare for the second half of the Bundesliga season.
Young full-back David Alaba should also be joining Pezzaiuoli and his squad in Spain after he was inserted in the deal which saw Luiz Gustavo move to Bayern.
The 18-year-old will join Hoffenheim on loan until the end of the season.
"He is a great talent, but the problem is he does not get enough match practice at Bayern Munich," explained Bayern coach Louis van Gaal on his club's website.
"That is not good for a great talent - he has got to play."