The 58-year-old Italian, will be replacing Maurizio Sarri, who left the club after leading the club to second place finish in the Serie A behind leaders Juventus, which automatically send them back to Champions League football next season.
Ancelotti said via BBC: “I am really happy and honoured to manage a team with a unique city and incredible fans.”
While Sarri, on the other hand, has been linked with a move to Ancelotti former club, Chelsea, with current manager Antonio Conte reported to be leaving the club this summer.
Napoli president Aurelio de Laurentiis was the first to announce the departure of Sarri, thanking him for his efforts with the club.
De Laurentiis announced: “I thank Maurizio Sarri for his dedication to Napoli that has given the city and the fans worldwide prestige and emotions.
“He created a model of play admired everywhere and by anyone. Bravo Maurizio.”
Carlo Ancelotti is no stranger to Serie A football having winning the league while managing Inter Milan back in 2004, acquiring two UEFA Champions League, two UEFA Super Cup and one FIFA Club World Cup.
Ancelotti has an incredible record of claiming a league title in every club he managed, Chelsea, Real Madrid and Bayern Munich.