The London club's hopes of retaining their crown have faded after a mid-season slump and, despite signs of recovery, a 1-0 home defeat by Liverpool last weekend was a further setback.
Ancelotti takes his team to neighbours Fulham on Monday and with the other title contenders playing before that, Chelsea could be even further adrift by then.
"It is difficult to think we can come back to fight for the title," the Italian told a news conference.
"It is better for us to think game by game in the Premier League. We have to reach minimum fourth place in the table.
"Obviously to close the gap (with United) is very difficult, we have to be honest, but the most important step now is to reach fourth place and we have to fight with the other teams."
Ancelotti's side currently occupy fourth place but are level on 44 points London rivals Tottenham Hotspur who they lead on goal difference after 25 games.
BETTER SOLUTION
Chelsea are still waiting for their first goal from new signing Fernando Torres since his record 50 million pound move from Liverpool and are still working out the best way to play him with Didier Drogba.
"My aim as a coach is to try to find the better solution with the players we have in the squad," Ancelotti said.
"I think Drogba and Torres are fantastic strikers and we have to try everything to put them together to play."
Chelsea's other big money signing in the January transfer window, defender David Luiz, will be given his first start on Monday after coming on as a late substitute against Liverpool.
"He has the ability and skills to play in all the positions in the back four, centre-back, left-back, he never played right-back but he has the quality to," said Ancelotti.
"He is Brazilian and so obviously has very good technique and he can help us to build our play better from the back.
"With David Luiz we can have more rotation and maintain freshness in the other defenders. Now we have a lot of opportunity to choose players, give someone a rest and keep every defender fit for the rest of the season."
United have 54 points from 25 games, four points ahead of second-placed Arsenal. Manchester City are third with 49 having played a game more with Chelsea a further five points back.
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