Despite feeling aggrieved at Zlatan Ibrahimovic's sending off, the Italian tactician believed his charges were beaten by the better side on Saturday evening
An own goal from Mamadou Sakho and a Pierre-Emerick Aubameyang strike were enough to seal the points for the visitors, despite a late consolation from Guillaume Hoarau, and Ancelotti conceded he had been hoping for more after his side's recent run of form.
"It is an ugly defeat, because we thought the team was in a good moment," he told reporters after the match.
"Today we did not play well, that's why we lost. Saint-Etienne played better than us and deserved to win. We did not put rhythm in the game, we did not have good organization, [so] it is normal to lose."
Zlatan Ibrahimovic was issued a red card for a high challenge on Stephane Ruffier with the score at 1-0, but although he believed the dismissal to be harsh, Ancelotti felt it had little impact on the result.
"The sending-off is not logical, but it was not the problem," he continued. "He did not deserve to be sent off because he looked at the ball and not the custodian.
"In the locker room, he said nothing, he was disappointed. But the problem was before, we had difficulties, we had no rhythm. Maybe the game Wednesday night took away some things. We won nine games before that. Maybe this is a good lesson for the future."
Blaise Matuidi was forced off with an injury midway through the match, but Ancelotti moved to dispel any fears of a long-term problem for the midfielder, and added that his presence would not have helped to change the game.
"Matuidi is a very important player but I do not think that with Matuidi it could have been a different game," said the 53-year-old. "Today, the team has not had a good game. He has a dead leg, I do not think it is serious."