"The Board of Directors has today decided to end Manuel Pellegrini's era as coach of Real Madrid," Real chairman Florentino Perez said in a statement.

"We wish to thank him for the work he and his staff did. His professional character, devotion and conduct were impeccable."

"The Board has also decided to sign Jose Mourinho as the team's new coach as soon as his contractual relationship with Inter Milan is resolved."

Real spent over €250million on new signings last summer, but finished the season empty-handed under the guidance of Chilean Pellegrini.

On the other hand, Mourinho led Inter to a sensational treble for the first time in the club's history.