The former Chelsea boss has been out of action since May last year when he was dismissed at Stamford Bridge.
But according to French newspapers Le Parisien and L'Equipe, the Italian tactician has been spotted alongside PSG sporting director Leonardo at Parc des Princes and a deal is imminent.
Despite currently top of the French Ligue 1, current PSG manager Antoine Kombouare's job is on the line after the shock exit from the Europa League group stage.
The club's Qatari owners are believed to be running out of patience for the 48-year-old and would prefer a high profile and proven manager at the helm.
And Ancelotti appears to fit their bill and his appointment could be confirmed anytime soon.
The 52-year-old is expected to be handed a two-and-a-half year deal worth €500,000 per month, which will make him the highest-earning coach in Ligue 1 history.