The La Liga giants had already ensured top spot in Group B, but head coach Ancelotti named a strong starting XI as Real defeated Copenhagen 2-0 on Tuesday.
Real took the lead in the first half at the Parken Stadium with a sublime curling effort from Croatia international Luka Modric.
Cristiano Ronaldo added a second from close range three minutes into the second period, and in the process broke the record for the most goals scored in a single group-stage campaign with nine.
Ronaldo could have scored again in the closing stages after being fouled in the penalty area by Thomas Delaney, but the Portuguese's resulting penalty was saved by goalkeeper Johan Wiland.
Ancelotti is keen for his side to maintain the form that brought 16 points in Group B, but feels City are the team to avoid after Manuel Pellegrini's men finished second in their pool.
"I think that Manchester City will be the most dangerous team among those who finish second in their sections," Ancelotti said. "For us, it's important to continue along this path and look to get even better."
The 54-year-old was happy with the application of his side in Copenhagen.
He added: "That was a serious game that wasn't at all easy. My players did well and showed good attitude and solid play.
"The Real Madrid shirt motivates everyone here; it ensures the players give their all in every match."
