Real Madrid have appointed Italian Ancelotti as their new coach, the Spanish club said on Tuesday. The former Paris St Germain coach has signed a three-year contract with Real.
He will be replaced in Paris by 47-year-old Blanc, who left his job as France coach after their Euro 2012 quarter-final exit and led Bordeaux to the French title in 2009.
Ancelotti, 54, has been linked with the post since Mourinho's departure and had asked to leave PSG but the deal was reportedly held up until the French champions found a replacement.
PSG announced they had agreed a two-year deal with Blanc at the same time as Real made public their agreement with Ancelotti.
Spanish media have reported that Real will pay PSG around four million euros in compensation for the year's contract he still had left with the French club.
With both long-expected appointments now finalised, both men can now presumably begin their summer recruitment plans.
Both Real and PSG will have major funds available, and have already been linked with the likes of Isco, Edinson Cavani and Gareth Bale.
In addition to incoming transfers, the appointments should lead to potential outgoing deals being green-lighted, such as Madrid striker Gonzalo Higuain who is reportedly in talks with Arsenal and Juventus.