Ancelotti was last seen in the Premier League back in 2011, where he was axed by Chelsea after failing to steer them to the Premier League title.
Since then, he has enjoyed stints at Real Madrid and Bayern Munich – with the German giants sacking him in October after an inconsistent start to the season.
With Italy failing to qualify for the 2018 World Cup, talk has been rife that they could be about to turn to Ancelotti to bring back the glory days.
Yet Italian newspaper Gazzetta dello Sport say they could face a fight to make him their next boss.
And that is because Chelsea and Arsenal have explored the possibility of bringing him back to England.
Managers who should still be under contract for other teams
Tue, November 7, 2017
Click to reveal managers who should still be under contract with other teams
1 of 6
David Moyes – Manchester United until 2019 (left in 2014)
Chelsea fans still hold Ancelotti in high regard, with the Italian guiding them to a league and FA Cup double back in 2010.
Antonio Conte’s future at Stamford Bridge remains shrouded in uncertainty following the Blues’ sluggish start to the current campaign.
And Chelsea, with their reputation as a trigger-happy club, could take the plunge and wield the axe if results fail to improve.
Gazzetta dello Sport add Arsenal are also interested in appointing him.
Chelsea and Arsenal have contacted Carlo Ancelotti
Carlo Ancelotti could replace Antonio Conte or Arsene Wenger
Arsene Wenger ended months of uncertainty over his future when he signed a two-year contract extension back in the summer.
But, with Arsenal well off the pace at the top of the table, he could step down from his role at the end of the season.
Italy, however, will no doubt want to ruin the Premier League giants’ plans.
The 2006 World Cup winners suffered a shock World Cup play-off defeat to Sweden on Monday.
And that means they will be absent from the world’s biggest tournament for the first time since 1958.