The Spanish giants are once again going in search of 'La Decima' - a 10th European Cup - and their convincing performances in Group B saw them sail through to the last 16 with ease.
Germans Schalke impressed in Group E, however, and Ancelotti is treating the 2011 semi-finalists with due deference, insisting only hard work will see Los Blancos succeed across the two legs.
The Italian told AS: "The last 16 of the Champions League is always difficult; we will have to stay very focused.
"They are a team with a lot of experience. It's got nothing to do with good or bad luck.
"This is the last 16 of the Champions League and we have to give our all in both matches.
"I think we are playing well now, but in February we will have to be better."
Real have reached the semi-finals for three years in a row but they last reached the final in 2002, claiming the trophy for the ninth time with a 2-1 victory over Bayer Leverkusen in Glasgow.