The Real coach will not replace Ancelotti and is working on secret plans to bring fresh blood to the Bernabeu next season.
Mourinho to remain at Real Madrid amid Chelsea talk
Jose Mourinho has rejected the opportunity to make a triumphant return as Chelsea manager, three and half years after being dismissed by Roman Abramovich.
Carlo Ancelotti's future as manager has been the subject of intense conjecture and the Italian said last week that it would "not be a problem" if Chelsea chose not to keep him after a season without a trophy.
He has not ruled out working at Chelsea again if the moment is right, though his preference is to succeed Sir Alex Ferguson at Manchester United.
However, the timing remains wrong for either move. "Chelsea are desperate to have Jose back," a close friend of Mourinho's told The National. "But it's not possible now."
Asked about an approach to Mourinho, Chelsea declined to comment last night.
Mourinho left Chelsea in 2007 but communication lines have been gradually restored between the Portuguese alchemist and Abramovich, the Chelsea owner. The pair have occasionally met, and just six months after his departure from Chelsea, Mourinho accepted from Abramovich a gift of a Ferrari 612 Scaglietti worth Dh12 million.
But Florentino Perez, the Madrid president, has been convinced by Mourinho to support his plan to restructure the club into one capable of reclaiming the Spanish title from Barcelona and winning a 10th European Cup.
Mourinho has emphasised the need to rationalise the club's hierarchy.
Tellingly, he has been granted unprecedented control over Madrid's transfer policy as he seeks to further strengthen a young side that last week became the first Real team since 2003 to reach a Champions League semi-final.
Mourinho has drawn up a four-position recruitment list and presented Perez and Jose Angel Sanchez, the director general, with a series of detailed scouting reports on potential targets.
The trio have already done extensive work to prepare offers for the new recruits, keeping it secret from the rest of the club's sprawling hierarchy, as requested by Mourinho.
This new recruitment strategy contrasts markedly with the internal difficulties Mourinho faced in his first two transfer windows at the Bernabeu.
Last summer, he was asked to concentrate on relatively inexpensive signings such as the Germany internationals Mesut Ozil and Sami Khedira for €15m and €14m, respectively (Dh76.5m and Dh41.4m), while being prevented from selling the injury-afflicted Kaka.
In January, he had to battle stiff resistance to the acquisition of a back-up striker despite a long-term injury to his most reliable centre-forward, Gonzalo Higuain.
Mourinho's new position of strength was reflected in his decision not to talk to the Madrid press ahead of last night's el clasico with Barcelona, prompting Spanish journalists to walk out of the club's Friday media briefing in protest.