Real secured their spot in the final with a 5-0 aggregate victory over holders Bayern Munich, and La Liga leaders Atleti duly followed suit by defeating Chelsea 3-1 over two legs.
Considering Real are gunning for a 10th triumph in Europe's premier competition, the Bernabeu outfit are considered by some to be favourites due to their impressive pedigree in continental competition.
However, Ancelotti was quick to congratulate Atleti, and is adamant that the final - being held in Lisbon on May 24 - will be a tightly contested affair.
"Everyone in Madrid is happy and there are no favourites for the final," he told Sky Italia. "Atletico deserve to be there, they were simply better.
"Anyone who has been to a final knows there are no favourites. It will be a close game."
Ancelotti also insisted that he is relishing the prospect of a derby encounter, and is looking forward to the challenge of ending Real's 12-year wait for Champions League success.
He added: "I'm excited. I live in a world where you get to enjoy these positive moments.
"It's a great success getting to the Champions League final with Madrid after 12 years.
"I feel good. It's important because it allows you to see things in the right way.
"I don't have personal ambitions. I'm working at a club that's perhaps the biggest in the world."
