Blanc was being lined up at the end of last week with Ancelotti's move imminent, and now the Frenchman has been announced by the club as their new boss.
The former France international has signed a two-year deal at the Ligue 1 outfit, which will keep him at the helm until the summer of 2015.
"Paris Saint-Germain is pleased to announce the arrival of Laurent Blanc as coach for a period of two years," the club said in a statement. "He will lead the team with his staff at the resumption of training on July 1."
Blanc, whose most recent role was as France coach, will be officially unveiled later today.