Pellegrini does not fear Barca
The Italian said in a statement on the club's website that he had made taken the decision "in the best interests of the team".
His exit comes with Watford - who, under Zola, lost last season's play-off final to Crystal Palace - on a run of nine matches without a win in the second tier following Saturday's 1-0 home defeat to struggling Sheffield Wednesday.
Zola leaves the Hertfordshire club 13th in the table, eight points adrift of the top six.
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