The Italian succeeds Guus Hiddink, whose short stint at Stamford Bridge ended after Saturday's FA Cup final victory over Everton.

Ancelotti, who has long been linked with the Stamford Bridge post, left Milan by mutual consent on Sunday.

Former Champions League winner Ancelotti will officially take charge on July 1.

A statement on the club's website read: "Chelsea Football Club is delighted to announce that Carlo Ancelotti has agreed to become our new manager.

"He has signed a three year contract and will start on July 1, 2009.

"Carlo was the outstanding candidate for the job. He has proved over a long period his ability to build teams that challenged for, and have been successful in, major domestic and European competitions.

"He also had a highly successful playing career in those competitions and therefore brings unparalleled all round experience to the job.

"We are sure everybody at Chelsea will give him a warm welcome and we are all looking forward to working with him."

Ancelotti, 50 later this month, twice won the Champions League, in 2003 and 2007, and the Serie A title in 2004 during his eight years in charge at Milan.

He has previously coached at Reggiana, Parma and Juventus.

His track record of success dates back to his playing days when he also won two league titles and two European Cups with Milan.

He becomes the fourth Chelsea manager in 21 months following Jose Mourinho, Avram Grant, Luiz Felipe Scolari and Hiddink.

(Soccer365.com)