Keller’s fate was sealed by a 2-1 defeat to Hoffenheim on Saturday, which left the Gelsenkirchen club 11th in the Bundesliga with just eight points from seven games.
Schalke are also third in their Champions League group after two draws in their first two matches.
Di Matteo, 44, starred as a player for Italy and Chelsea and as caretaker manager led the London club to their first Champions League title in 2012.
He has also managed Premier League club West Bromwich Albion.
Keller had taken over at Schalke from Dutchman Huub Stevens in December 2012.