Ancelotti is expected to leave the 15-time European champions at the end of the season and the Italian is understood to be open to the prospect of taking over as the national coach of Brazil.
The five-time World Cup winners are thought to be keen to appoint Ancelotti before their World Cup qualifying matches against Ecuador and Paraguay in early June.
Diego Fernandes, a Brazilian businessman, has been working behind the scenes to facilitate a deal.
Fernandes, who works in the financial sector but has strong connections with sports executives, has been a regular presence at the Bernabéu in recent weeks as attempts are made broker an agreement.
Xabi Alonso, the Bayer Leverkusen manager and former Real midfielder, has been widely touted as Ancelotti’s potential successor at the Real.
Ancelotti, 65, admitted there was uncertainty over his future in the wake of Real’s Champions League quarter-final defeat by Arsenal, who won 5-1 on aggregate after a 2-1 win at the Bernabéuon Wednesday night.
Real are due to face Barcelona in the Copa del Rey final on April 26 and trail their bitter Catalan rivals by four points in La Liga with seven games remaining.
Brazil have been without a manager since sacking Dorival Junior in the wake of a 4-1 defeat by Argentina in March.
The Seleção are fourth in South American qualifying for next summer’s World Cup, 10 points behind leaders Argentina, with four matches still to play. The Brazilian Football Federation (CBF) is believed to be reluctant to wait until August, when Brazil will only have two qualifying games remaining, before appointing a new manager and hope to get a deal over the line for Ancelotti soon.
Ancelotti has been in charge at Real since 2021 and has won two Champions League titles and and two La Liga titles during his second spell with the club.
