Despite being without Sergio Ramos, Marcelo and James Rodriguez, Ancelotti's men still went into the clash considered favourites, aiming to go 10 points clear of their hosts with a win at Vicente Calderon.
But Atletico ran out comprehensive winners thanks to goals from Tiago, Saul, Antoine Griezmann and Mario Mandzukic.
Ancelotti pulled no punches in assessing the defeat, telling reporters: "Atletico deserved to win. They beat us in every aspect; fight, play, organisation and second balls. Not one Real Madrid player did well.
"We all failed. We all arrived second; we lost all of the tackles and all the aerial battles. We did not play the game at all. We were worse than Atletico at everything, but it's only three points.
"We must look at it over next days to determine why this happened. We are hurting a lot. Clearly we must change our attitude.
"The line-up was normal. It was the most clear and most logical team to play in this game, but the attitude and lack of motivation was a problem with everyone.
"It is not normal that Real Madrid play a game like this, so I must take responsibility for that and try to fix things quickly."
Over the course of the 90 minutes, Real mustered just a single shot on target and, even with Cristiano Ronaldo back in the team following his suspension, Ancelotti was angered by his side's struggles in attack.
"We didn't have good possession," he added. "We had nothing [in attack] today.
"We must weigh up in coming days why this happened, with calm and cool heads, and try to change things for future."
