The Italian is overseeing the transformation of the club under mega-rich Qatari owners who would like to establish the club as the best team in Europe.
His side missed out on the Ligue 1 title by three points last season to Montpellier despite being top when he took over during the winter break.
And despite spending heavily on Zlatan Ibrahimovic, Thiago Silva, Ezequiel Lavezzi and Lucas Moura this summer, the Italian has put being crowned kings of Europe on the back burner, insisting domestic success is the number one target.
“We cannot afford not to win the Ligue 1 title which is our priority,” he told La Gazzetta dello sport. “But no one knows what we will do in the Champions League.
“We want to go forward as much as possible, but much will depend on the draw. In two or three years we could make it into the last four teams. When you are in the semi-finals anything can happen.”
The size of the task is not lost on Ancelotti, who won a league and cup double with Chelsea in his first season in charge.
He was sacked, though, at the end of the next season despite finishing second in the Premier League – blamed chiefly on his failure in Europe’s elite competition.
Ancelotti, though, knows what it takes to win the competition as he was a two-time Champions League winner during his decade-long spell at Milan and is backing Barcelona to win the competition this season despite having a new manager in Tito Vilanova following Pep Guardiola’s resignation.
“Barcelona is a perfect machine,” he added. “They remain the team to beat, even with the uncertainty over Vilanova.
“For Chelsea this will be a year of transition as it is very hard to win the cup again. They have signed interesting players like Eden Hazard, but they have lost Didier Drogba.
“Real Madrid will be stronger with Luka Modric. He was too expensive for us.
“Manchester United look much better with Robin van Persie and I am waiting for the bang on the transfer market by Manchester city who tried to sign Thiago Silva.”