The Costa Rica international is reportedly nearing a move to the Santiago Bernabeu outfit, with reports in the Spanish press suggesting that Los Blancos have agreed to meet the shot-stopper's €10 million release fee.
Despite the rumours of his impending arrival in the Spanish capital, Navas remains adamant that he has not signed any contract with the Champions League winners and Ancelotti has now confirmed that his side have not finalised a deal for the player.
"Keylor Navas is not a Madrid player for now; we have three goalkeepers here,” Ancelotti said. "We’ll see, we are in pre-season.
"Iker [Casillas] has just arrived, he has begun training. For us, it’s not a problem of goalkeepers. Last year, I understand that there were many debates in the press – but not for me.”
He added: “I’ll decide at the beginning of the season which goalkeeper will play.”
Despite bringing in Germany World Cup winner Toni Kroos and Colombia star James Rodriguez this summer, the future of midfielder Angel Di Maria remains uncertain, with French champions Paris Saint-Germain said to be weighing up a big-money move for the Argentine.
However, Ancelotti admitted that the extra competition for Di Maria next season would be good for the whole team as it would offer him more options should any of his players sustain injuries.
"Di Maria is a Madrid player. It is clear that with the arrival of James and Kroos, there is more competition. But all the big clubs have competition, and that gives energy to the team,” Ancelotti said.
“Last year we had problems at the end of the season with injuries that were not very good and with these two players [Kroos and James] we have the ability to reach the end of the season without problems.”