Ancelotti lines up a move for the Argentine.
Real Madrid are planning a stunning offer for Manchester City forward Sergio Aguero to bolster their attack after Gonzalo Higuain leaves the Santiago Bernabeu, reports the Metro.
Higuain is expected to depart Madrid this summer with Arsenal, Chelsea and Napoli all being linked with the Argentina international.
Therefore new Los Blancos boss Carlo Ancelotti will need fresh attacking talent at the club and Aguero is being targeted as the ideal replacement.
With City on the verge of signing Sevilla striker Alvaro Negredo and Stevan Jovetic expected to make the switch to Eastlands from Fiorentina, there is scope for forwards to leave the Etihad Stadium.
Edin Dzeko has already been promised a run in the first team this season and as a result new City manager Manuel Pellegrini may be open to letting Aguero leave – if the money is right.
The 25-year-old was a club record signing for the Citizens in July 2011 when the Argentinian joined for £38m from Atletico Madrid.
The striker has gone onto score an impressive 47 goals in 88 appearances in all competitions for City, as well as providing 19 assists.
Aguero has also scored 18 times in 45 caps for Argentina and plays alongside Madrid’s Higuain in the national team.
The Spanish giants have already spent a considerable amount of money in this current transfer window, with young talents such as Isco and Asier Illarramendi contributing to a total outlay since June 1 of over £60m.
Therefore Higuain would have to be sold first before any bid could be tabled for Aguero.