Pellegrini, 56, failed to end Barcelona's reign as Spanish champions
Real Madrid have sacked coach Manuel Pellegrini, with the Spanish giants set to turn to Inter Milan's Jose Mourinho as his replacement at the Bernabeu.
Mourinho is expected to head to Real after winning the Champions League in Madrid with Inter on Saturday.
"I'm ready to admit to some mistakes but Mourinho's hiring is an opportunity that Madrid could not miss," said Real president Florentino Perez.
Inter are resigned to losing the 47-year-old former Chelsea boss to Madrid.
However, Inter president Massimo Moratti has suggested Mourinho's departure could be a protracted affair, with the Italian club demanding up to £13.5m in compensation given the Portuguese coach's contract at the San Siro runs until 2012.
"What is still left to resolve is the interpretation, between Mourinho and the club, of his contract," said Perez.
Mourinho has often said he wants to manage in Spain and has cited the fact that no manager has ever won championships in England, Italy and Spain.
Pellegrini, 56, has been under pressure after failing to win a trophy this year.
Real were pipped to the Primera Liga title by Barcelona and were knocked out of both the Champions' League and the Spanish Cup.
Pellegrini spoke of his frustrations in the Real job in an interview with Cadena Ser radio.
"I came here with high hopes and great pride. Unfortunately, I wasn't able to do what I wanted to do and I had differences from the beginning of the season," he said.
"There were a lot of disagreements. I asked to keep [Wesley] Sneijder and [Arjen] Robben, who were two very important players for me. I missed having a debate on sporting issues, with the coach included."
Pellegrini was recruited from Villareal last June to take charge of a team that had well over £200m spent on new players such as Cristiano Ronaldo, Kaka and Karim Benzema.
Robben and Sneijder were sold to help offset the costs.
Pellegrini said: "Florentino's project is extraordinary but I think he's got it wrong.
"I haven't spoken to him since August. I respect his stance as president [but] he has a sporting project in which I don't fit."
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