PSG, who also want to recruit David Beckham as a player but say "nothing is signed", confirmed the arrival of the former AC Milan and Chelsea manager at a news conference after days of speculation.
"I think I can do good work here. We have all the conditions to succeed. I am delighted and very enthusiastic about this project," Ancelotti said.
"It is a project that appealed to me. I am not here to turn everything on its head. I am here to bring my knowledge."
Former player Claude Makelele will be the Italian's assistant.
"He is a former PSG great and the club can benefit from his experience," Ancelotti said of the former Real Madrid and Chelsea midfielder.
"He will be a good intermediary between me and the players."
Kombouare's position had come under intense scrutiny after the club's new Qatari owners bankrolled a close-season spending spree of around 85 million euros.
However, they recovered in Ligue 1 to be top after 19 games but that was not enough to stop the owners and sporting director Leonardo from wielding the axe on unheralded former Valenciennes boss Kombouare who was in charge before May's takeover.
A more high-profile name such as Ancelotti fits better with their aim of turning PSG into one of Europe's top clubs, with their pursuit of marketing phenomenon Beckham another example of the huge ambition.
The club, only formed in 1970 as the French capital struggled to get a foothold in Europe's football map, won the last of their two national titles in 1994 and have one European Cup Winners' Cup to their name.
Media reports have linked PSG to Chelsea's little-used France winger Florent Malouda in the January transfer window and Milan striker Alexandre Pato, who recently criticised his coach Massimiliano Allegri.
