The Bayern team and management are now travelling back from Paris and Sportbild says Ancelotti could be sacked later on Thursday when a "crisis meeting" is held in Munich.
Ancelotti led Bayern to the Bundesliga title in his first season in charge, after being appointed to replace Pep Guardiola previous year.
The 58-year-old was relieved of his duties after Bayern fell to a 3-0 defeat at the hands of PSG in the Champions League.
Bayern have already dropped five points from their opening six Bundesliga outings and the comprehensive way in which PSG beat them 3-0 on Wednesday night led to Ancelotti walking away from his role. The former-Bayern player faces a tough challenge ahead, starting with a league match against Hertha Berlin on Sunday.
Ancelotti's assistant Willy Sagnol will take over on a temporary basis, with former Borussia Dortmund boss Thomas Tuchel likely to be at the head of the queue to replace the Italian full-time.
"The performance of our team since the start of the season did not meet the expectations we put to them", said Bayern chairman Karl-Heinz Rummenigge. I think we all agree on that.
"If I take a look to the right or left, then there is nothing to misunderstand or to interpret wrong".
After that game the Italian was questioned by German media about his tactics and team selection, following his decision to leave Franck Ribery, Arjen Robben and Mats Hummels on the bench at kick-off. Carlo is my friend and will remain, but we had to make a professional decision in the sense of FC Bayern. I think it's important to turn things around after this loss, to present as Bayern Munich and to show we are a team, [the one] which performed well in Europe and in Germany previous year. "That's where we have to continue". In the first half, we had good control of the game, good possession, some chances.