By Andy May
Despite being cleared in a criminal court in the United Kingdom of racially abusing Queens Park Rangers' Anton Ferdinand in a Premier League match last season, the English Football Association found Terry guilty of using 'abusive and/or insulting words and/or behaviour, which included a reference to ethnic origin and/or colour and/or race'.
In an exclusive interview with ESPN STAR Sports, Ancelotti said: "It is unbelievable".
"John Terry does not deserve this. The judgement one month ago [in court] was okay so I cannot understand how the FA can make a different decision. I think that it is really strange.
"I was really surprised [with this whole episode] because he has a really fantastic relationship with everyone. I am sure he is not racist - one hundred per cent."
Terry's ban is half the length of the eight-match suspension handed to Luis Suarez last season after being found to have repeatedly used the word "negro" towards Manchester United's Patrice Evra in a game.
Terry - who has always maintained his innocence - has decided to retire from international football with England - a choice Ancelotti believes is the right one:
"I do not think he will play for England again and I think that is a good decision. It is a bad thing for England because John Terry did well for the national team."
Ancelotti also spoke to ESPN STAR Sports on the rumours another one of his former Chelsea players, Ashley Cole, is set to join him at Paris Saint-Germain next summer - when his contract in London expires.
"This is normal because a lot of players are linked with PSG - maybe one hundred players have been linked with the club recently. For this season we have a very good squad but for next year I am not sure," he said.
"I believe Ashley Cole is the best left back in world football at the moment."