Former Wolves boss Julen Lopetegui has turned down Al-Ittihad.
Al-Ittihad have pushed to sign the former Real Madrid coach, but he retains hope of finding himself a new job in England.
As such, the Saudis have now turned to Marcelo Gallardo.
Transfer expert Fabrizio Romano is reporting: "Marcelo Gallardo will sign as new Al Ittihad manager on contract valid until June 2025.
"It will also include an option to extend for further 18 months, until June 2027."