Ancelotti is understood to have told PSG president Nasser Al-Khelaifi last week that he wouldn't be staying.
Le Parisien has reported that Wenger will meet PSG owners next week, with Ancelotti likely to replace Jose Mourinho at Real Madrid.
Friction between Ancelotti and PSG sporting director Leonardo is believed to have encouraged the former Chelsea manager to seize his opportunity in Madrid.
PSG winning the title would allow Ancelotti to come clean about his plans once Mourinho has agreed on his severance with Real Madrid. This sequence of events will present Wenger with the biggest dilemma of his career as he attempts to secure Arsenal's place in the Champions League for a 16th time.
Arsenal will hope any flirtation with PSG is a bargaining device by Wenger to increase his transfer budget. Stan Kroenke, the club's majority owner, is believed to have set aside £50 million ($90 million) for reinforcements after another disappointing season: Arsenal's eighth without a trophy.
With the Emirates approaching mutiny, Wenger's team assembled a seven-game unbeaten run following the 2-1 defeat at Tottenham Hotspur on March 3 to put them back in contention for a Champions League qualifying place.
But Arsenal are still 21 points behind the champions, Manchester United, and went out of the Capital One Cup against Bradford City and the FA Cup against Blackburn Rovers.
Their progress in Europe was halted by Bayern Munich. Robin van Persie's move to United has provided a painful reminder all season of the exodus of talent since 2005.
Wenger's position has stabilised since the team dropped to 10th place in the Premier League table on December 1. Yet both sides know there is a T-junction ahead. Wenger reacted angrily in February to reports that he would be offered a new two-year contract, accusing the authors of mischief.
Asked about the rumours in his native France connecting him to Ancelotti's job, Wenger said after the 1-1 draw with Manchester United on Monday: "First of all I don't know too much about what's been said about me. Then I'm concentrating on the next game and the next season.
"At the end of my contract I'll see what I can do. I've always respected my contracts. I can't see at my age why that should change." Seasoned Wenger-watchers detected a note of ambiguity in that statement.
Unconfirmed reports say the last year of his current deal, which ends next northern summer, is optional, which means he could leave without breaking the spirit of previous pronouncements on seeing out his contract.
The dilemma for him is that the PSG manager's job might not be available in 12 months, though an executive role might also appeal.
PSG's owners will have been encouraged by a report suggesting Arsenal have already identified Joachim Low, the Germany coach, as a potential long-term replacement at the Emirates.
Low would treble his salary by coming to England. Meanwhile, in the longer term, Bayern Munich's Jupp Heynckes is favoured by some inside the Dfb (the German FA) to lead a highly talented group of young players with the national team.
PSG's fallback could be Eric Gerets, who has coached the Qatari club Lekhwiya, who are backed by PSG's owner Sheikh Tamim ben Hamad Al-Thani. But they seem confident of persuading Wenger that a rebuilding job at Arsenal is less appealing than the prospect of managing Ibrahimovic, Pastore and Lavezzi at a rising club in his own capital city; a club who are bound to spend again this northern summer with the aimof becoming a major European power.
With 15 Champions League campaigns behind him, Wenger offers the right continental credentials, even if the trophy itself has eluded him.
One moral leap for him would be abandoning his dislike of the kind of financial model which PSG (and Manchester City) exemplify. Today PSG are a top-down club. Wenger likes to work from the ground up.
He must know, though, that his final year at Arsenal is unlikely to close the huge gap on United and City. Chelsea are also likely to be stronger and more stable next seasons. Should he jump? PSG's owners say that he will.
Arsenal contenders
Joachim Low, 53
Manager of the Germany team since 2006. Lost final of Euro 2008 to Spain, and went down to the same opponents in the semifinals of 2010 World Cup. Attack-minded coach has striven to reduce the time players spend on the ball before passing - which would delight Emirates fans who yearn for the fluid style of the Thierry Henry era.
Jurgen Klopp, 45
Articulate and great tactician, led Borussia Dortmund to their first league and cup double last season and last week pulled off a 4-1 win over Real Madrid in Champions League semifinal first leg.
David Moyes, 50
Has performed wonders at Everton on a tight budget - a policy which would appeal to Arsenal's cost-conscious owner Stan Kroenke. Moyes is holding out on signing a new contract until the end of this season. The fiery Scot has many admirers but could be Arsenal's if they were to move fast.
Dennis Bergkamp, 43
Ticks the box for those who would like to see a manager with previous Arsenal connections. Turned down a scouting role for the Gunners when he retired from playing but was tempted into coaching by Ajax and is Frank de Boer's No2.
