The former Blancos director thinks the Italian coach has the characteristics to manage the biggest names in world football and is still improving, even at the age of 53.
Mourinho's future with Real Madrid appears uncertain and Valdano thinks the current Paris Saint-Germain boss would be a fitting replacement.
“Ancelotti is a coach who understands the star players,” Valdano told Marca. “He has matured in the last few years. It is necessary, as it has been in the past, to have a coach with so much personality [at Real Madrd]."
The 1986 World Cup winner also hailed Xabi Alonso for his performances in midfield.
"To play in the he middle of the field for Real Madrid is very demanding. I think replacing him is a very difficult challenge if he was to leave. Xabi Alonso is the second most important player at Real Madrid in terms of the impact he has on the game," Valdano said.