Reports in the Italian media had indicated that Ancelotti could move back to San Siro should Real fail to win the UEFA Champions League final against city rivals Atletico Madrid a week on Saturday.
The 54-year-old won one Serie A title and two Champions League crowns in his first coaching stint with Milan from 2001 to 2009.
But, ahead of Real's final La Liga game of the campaign versus Espanyol on Saturday, Ancelotti insisted he will not be linking up the beleaguered 18-time Italian champions, who are in danger of missing out on European qualification for next season.
"I've read some stuff that's not true," Ancelotti said.
"I have a very good relationship with Milan, and (Milan president and chief executive Adriano) Galliani and I talk often, but just as friends. My future is pretty clear."
The clash with Espanyol is little more than a dead rubber for Real after their bid to regain the Spanish title collapsed.
Barcelona will host Atletico on Saturday in a title decider that will see the victor win La Liga.
"Barca-Atleti is a very interesting match and it will be tough for both of them," Ancelotti added. "But I don't know what suits us better. All I can say is let the team that deserves it win the title."
