Ancelotti, whose tenure will end after the final league match on May 25, leaves behind a decorated spell in charge of Los Blancos.
During his time, he secured 15 major titles including three Champions League crowns, three Club World Cups, three UEFA Super Cups, two La Liga titles, and two Copa del Rey trophies.
According to sources close to the club, the decision was mutually agreed upon after Madrid’s Champions League exit to Arsenal.
Ancelotti is expected to take over as Brazil’s national team manager ahead of the 2026 World Cup. In the meantime, Santiago Solari may serve as interim manager during the Club World Cup.
Alonso, who will sign a three-year deal, returns to the club where he played from 2009 to 2014.
Since leaving his youth coaching role at Real Madrid in 2019, he progressed through Real Sociedad’s B team before joining Bayer Leverkusen in 2022.
His spell in Germany has been highly successful, guiding Leverkusen to a Bundesliga and DFB-Pokal double in 2024, ending Bayern Munich’s 11-year domestic dominance.
Joining Alonso at Valdebebas will be fitness coach Alberto Encinas and long-time assistant Sebas Parrilla. The future of current fitness chief Antonio Pintus remains uncertain, though goalkeeper coach Luis Llopis is set to continue.
Real Madrid’s transfer plans under Alonso will align with the club’s existing recruitment structure, with the manager consulted but not leading decisions.
The club aims to reinforce at centre-back and midfield, with Juventus defender Dean Huijsen among the prime targets.
Leverkusen CEO Fernando Carro confirmed the German club respects Alonso’s decision, with a gentleman’s agreement ensuring an amicable exit.
The transition marks a new chapter at the Bernabéu as Real Madrid aim to maintain their dominance under one of their former stars.