The 61-year-old Italian, who was previously in charge of Real Madrid from 2013 to 2015, has left the Merseyside based outfit after 18 months in charge of the Toffees.
He takes over from Zinedine Zidane at Los Blancos and the moves means Everton are on the look out for a sixth permanent manager in five years.
Ancelotti has put pen to paper on a three-year deal at the Santiago Bernabéu and said the move represented “an unexpected opportunity”.
He added: “I have complete respect for everyone associated with Everton and hope they can achieve the exciting opportunity which I believe is the right move for me and my family at this time.”
“While I have enjoyed being at Everton I have been presented with an unexpected opportunity which I believe is the right move for me and my family at this time.”
Ancelotti has won 15 pieces of silverware during his managerial career is one of only three managers to win three European Cups – along with Liverpool legend Bob Paisley and former Real Madrid manager Zidane.
The Italian has won domestic honours with AC Milan in his native land, Chelsea in England, Paris St-Germain in France and also in Germany with Bavarian side Bayern Munich.
Having won the Champions League twice with I Rossoneri (2002-03 and 2006-07), he led Real Madrid to an historic 10th success in the competition in 2014, but he left the managerial post in May 2015.
|Five years of change at |
|Carlo Ancelotti||June 2020||43.1|
|Marco Silva||December 2019||35.8|
|Sam Allardyce||May 2018||37.5|
|Ronald Koeman||October 2017||40.4|
|Roberto Martinez||May 2016||38.1|