It is the first time in 60 years the Azzurri have missed out on the pinnacle tournament of world football, and the first major tournament they have missed since Euro 1992.
The failure to qualify represented a pivotal moment in the history of Italian football, with a host of aged stars announcing their retirement from the national game.
Legendary goalkeeper Gianluigi Buffon revealed his service for the Azzurri has come to an end, while Daniele De Rossi and Andrea Barzagli have called time on their international careers.
Hopeful replacement Ancelotti, 58, who has a long and distinguished career in club management on his CV, is currently unemployed after being sacked by Bayern Munich in September.
He played 26 times for his country and has gone on to win league titles across Europe with some of the world's biggest clubs as a manager.
Italy next play in March, with two friendlies against England and Argentina, before beginning their inaugural UEFA Nations League campaign and Euro 2020 qualifying.