After 18 months in command at Goodison Park, Carlo Ancelotti , who managed Real Madrid for two years between 2013 and 2015, has stepped down.
He takes over from Zinedine Zidane at Real Madrid, leaving Everton in search of their sixth permanent manager in five years.
Ancelotti has agreed to a three-year contract with Real and described the move as a "unexpected chance."
"I have tremendous respect for everyone connected with Everton and hope they are able to realize the wonderful potential that lie ahead of them," he continued.
"While I have spent my time at Everton, an unexpected opportunity has offered itself that I believe is the best option for me and my family at this moment."
Real will make Ancelotti's media debut on Wednesday, while Everton announced they will "immediately begin the process of finding a new manager."
Ancelotti, along with Liverpool great Bob Paisley and former Real manager Zinedine Zidane, is one of just three managers in history to win three European Cups.
He has won domestic titles with AC Milan in Italy, Chelsea in England, Paris St-Germain in France, and Bayern Munich in Germany.
After winning the Champions League twice with Milan, he led Real Madrid to a historic 10th title in 2014, although he stepped down as manager the following year.
Real Madrid won the Champions League three times with Zidane, but finished second in La Liga below local rivals Atletico Madrid in the 2020-21 season.