Corriere dello Sport says the Italian had agreed a four-year contract worth £8.8m a season.
Ancelotti is said to be ready to succeed Arsene Wenger.
However, the Mirror says the 58-year-old is not being considered by Arsenal and no deal is in place.
Wenger has a year to run on his deal after extending last summer, though the Gunners have been making moves in recent months to begin life after their veteran manager.
Sven Mislintat was brought in from Borussia Dortmund as head scout to reduce the burden on Wenger, but the Gunners now appear set to retain the French manager for next season.