Carlo Ancelotti was appointed Chelsea's new manager on Monday, a day after quitting as coach of AC Milan.

The Italian, who had been widely expected to take over at Chelsea, signed a three-year contract and will start work on July 1.

Ancelotti succeeds Guus Hiddink, who led Chelsea on a caretaker basis this season after the dismissal of Luiz Felipe Scolari. The Blues finished third in the Premier League and won the FA Cup, beating Everton 2-1 in Saturday's final.

"Carlo was the outstanding candidate for the job," Chelsea said in a statement. "He has proved over a long period his ability to build teams that challenged for, and have been successful in, major domestic and European competitions.

"He also had a highly successful playing career in those competitions and therefore brings unparalleled all round experience to the job."

Ancelotti won two Champions League titles and one Serie A championship during his eight years as Milan coach.

"There will be the same pressure because Chelsea and Milan are great teams in Europe and they want to win all the competitions, so I think there will be the same pressure," he told Chelsea TV.

Ancelotti announced his departure from Milan on Sunday after the club beat Fiorentina 2-0 in the last game of the season to finish second in Serie A and secure a spot in next season's Champions League.

"Milan for me was a great experience _ five years playing with a great team," he said. "We (had) a lot of success, eight years to coach a great team but now I think it's time to change and Chelsea for me was a great opportunity, a great team (for) a new experience."

Ancelotti won the European Cup twice as a player with Milan in 1989 and 1990, and the Champions League twice as coach in 2003 and 2007.

"Champions League for me is the best competition in the world and all want to win," he said. "Chelsea has a great record _ five semifinals in six years is a beautiful score but now we need to win."

Ancelotti said he will be working on improving his English.

"When we start the new season, I will speak well because it's important for me to speak with the players, the team, with the assistants, with all the operators who will work with me," he said.