
The 65-year-old Italian will officially take charge of Brazil on 26 May following the conclusion of the La Liga season.
Ancelotti won 15 trophies across two spells as Real manager and last season led Los Blancos to a Champions League and La Liga double.
However, his exit from Real comes after Sunday’s El Clasico defeat left Real seven points behind leaders Barcelona with three games remaining.
Barring a spectacular collapse from Barcelona, that result all but confirmed that Real will end the season without a trophy for the first time in four years.
A statement from the Brazilian Football Confederation (CBF) said Ancelotti was a “legend of the game” and acknowledged the significance of a foreign coach taking charge of the team.
“This landmark moment sees the coming together of two icons — the only five-time FIFA World Cup champions, and a coach with an unmatched record across Europe’s elite competitions,” the CBF said.
“The CBF warmly welcomes Ancelotti and looks forward to a new era of success under his leadership.”
In their statement, the CBF also thanked Real president Florentino Perez for “facilitating the coach’s release during his contract term”.
Ancelotti’s current deal with Real was set to expire in June 2026.
The Italian takes over the Brazil job from Dorival Junior, who was sacked in March after they lost 4-1 to arch-rivals Argentina in World Cup qualifying.
Brazil sit fourth in the South American group, having lost five of 14 games, although are still well placed to qualify for the 2026 finals.
Ancelotti’s first games in charge of Brazil will be the Selecao’s World Cup qualifiers against Paraguay and Ecuador next month.
Brazil have not won the World Cup since 2002 and the last time they were Copa America champions was in 2019.
Former Real, Liverpool and Spain midfielder Xabi Alonso is set to replace Ancelotti in the Bernabeu hot seat.
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