Ancelotti is in talks with Real over returning for a second spell in the Bernabeu hotseat with a deal understood to be very close.
The Italian has three years left to run on his Everton contract but the Premier League club are willing to let him go to Real.
An announcement is now imminent, with Toffees owner Farhad Moshiri already making moves to bring in a replacement.
And talkSPORT understands that Everton are set to try and tempt Nuno into making a swift return to management.
Nuno, 47, recently left Wolves after four years in charge at Molineux.
Everton next manager odds
Eddie Howe: 5/1
Nuno Espirito Santo: 6/1
Rafa Benitez: 6/1
Frank Lampard: 8/1
Joachim Low: 12/1
Antonio Conte: 14/1
Vitor Pereira: 16/1
Marcelo Gallardo: 16/1
This is a breaking news story. More updates will follow shortly.
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