Pep Guardiola is to leave Bayern Munich at the end of the season and will be replaced by Carlo Ancelotti, the BBC reports.
Guardiola, 44, has been linked with Manchester City, Manchester United, Chelsea and Arsenal.
The former Barcelona coach has won two league titles and the German Cup since joining Bayern in summer 2013.
Ex-Chelsea boss Ancelotti, 56, has been on a break since being sacked by Real Madrid in May 2015 and has signed a three-year deal with Bayern.
The German champions are eight points clear at the top of the Bundesliga and will play Italian club Juventus in the last 16 of the Champions League.
“We are grateful to Pep Guardiola for everything he has given our club since 2013,” said Bayern chief executive Karl-Heinz Rummenigge.
“I am convinced that Pep and our team will now work even more intensively towards achieving our major sporting goals – especially as it is now confirmed that Pep is to leave FC Bayern.”
Ancelotti has won the Champions League three times, twice with AC Milan and once at Real Madrid, and guided Chelsea to the Premier League title and FA Cup in 2010.
He recently suggested a preference to return to the English top flight but has instead decided to join Bayern.
“I am very honoured,” said Ancelotti.” I’ll be in next season to coach the great FC Bayern.”
Rummenigge added: “Carlo is a calm, balanced expert, who knows how to deal with stars and favours a multifaceted style of play – we were looking for this, and we have found it.
“We are looking forward to working with him.”
If Ancelotti wins the Bundesliga with Bayern next season, he will become the second coach to have won league titles in four of Europe’s top six leagues.
Jose Mourinho has won league titles in Portugal, England, Italy and Spain.
