The Argentine has impressed in temporary charge and has now been handed a two-and-a-half year deal
Real Madrid have confirmed Santiago Solari as the club's new permanent manager.
And in a show of faith to the Argentine coach, Solari has been handed a deal until 2021 by president Florentino Perez.
Solari, 42, took charge on October 29 on an interim basis following Julen Lopetegui's disastrous reign.
But the former player, who had stepped up from the Castilla side, was widely viewed as little more than a placeholder as Los Blancos sought a bigger name.
A club statement declared: "The board of directors of Real Madrid C.F., which met today, 13 November 2018, has agreed to appoint Santiago Solari as first-team coach until 30 June 2021."
Roberto Martinez and Mauricio Pochettino were both mooted as possible targets, with the Spurs boss seen as the club's No.1 long-term choice.
However, ex-Chelsea boss Antonio Conte appeared the man most likely to replace Lopetegui - until a move for the Italian was vetoed by senior Madrid players.
Madrid were under pressure to give Solari - or someone else - the deal on a permanent basis, due to Spanish rules preventing an interim coach being kept in position for longer than two weeks.
And all signs had pointed towards Solari being given the role until the end of the season, following four wins in his four games, scoring 15 goals and conceding just two.
The decision to hand Solari a long-term deal appears to be another pointer that Perez doesn't believe he can land Pochettino from Spurs next summer.
Pochettino himself is not long into a new contract at Spurs, and he is keen to lead them into their new stadium - which increasingly looks like being next season.
Following Real's 4-2 win over Celta Vigo on Sunday, Solari said: "The important thing is to do what is necessary for the good of the team, everything else doesn't matter."
Real took advantage of league leaders Barcelona's surprise 4-3 home defeat to Real Betis earlier in the day to cut the gap to top spot to four points.
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