Italian has reportedly admitted to his friends that his time at Stamford Bridge is nearing an end, amid speculation that Guus Hiddink could return for another stint
The Blues boss was brought in as a successor to Guus Hiddink at the beginning of last season, and managed to guide the west London club to a Premier League and FA Cup double in his first year in charge.
The strong form shown towards the end of last season boiled over into the current campaign, but the team slowly slipped and went on a rough patch of form that has since seen them competing for a Champions League spot as opposed to the title itself.
Now The Times reports that the Italian has accepted the Champions League exit was the last straw, and is believed to have told friends that he does not envision managing the club next season.
There has been talk of Hiddink returning to manage Chelsea after his successful short stint just before Ancelotti was brought in, but the Dutchman is reportedly not keen on returning to club management.