Madrid have been seeking a new boss after Jose Mourinho’s departure for his former club Chelsea last month, and Ancelotti had made it clear to PSG he was keen to join the Liga giants.
PSG were reluctant to lose the former Chelsea manager, yet were subsequently linked with a number of coaches, including Tottenham’s Andre Villas-Boas and Russia’s Fabio Capello.
Recent reports strongly linked ex-France boss Blanc with the post, and on Tuesday, in tandem with Real’s announcement, he was confirmed as Ancelotti’s successor.
Blanc has signed a two-year contract at the Parc des Princes while Ancelotti has penned a three-year deal at Madrid and will be unveiled at a press conference on Wednesday.
A statement from Real read: “Carlo Michelangelo Ancelotti will coach Real Madrid next season. The Italian has experienced success in every country where he has managed and arrives in the Spanish capital after being named coach of the season in France.”