The 54-year-old says he would jump at the chance to return to San Siro but dismissed speculation that he might succeed Cesare Prandelli as Italy coach
The 54-year-old Italian enjoyed a highly successful period at San Siro between 2001 and 2009, leading the Rossoneri to two Champions Leagues and one Serie A title.
Ancelotti has since held posts at Chelsea, Paris Saint-Germain and the Santiago Bernabeu but says he would jump at the chance to return to his former side.
"A return to Milan? Why not?" Ancelotti told Sky Sport Italia. "I'd always say yes to Milan."
Ancelotti went on to rule out an international role in the future, explaining that the Italy job would not interest him as he would miss working with players from day to day.
"You never know what will happen, but right now I like coaching on a daily basis," Ancelotti told Sky Sport Italia.
Ancelotti also voiced his admiration for Fiorentina boss Vincenzo Montella for his style of play and public persona.
"There are a lot of good coaches around right now, but personally speaking I do like Vincenzo Montella," he enthused. "I like how his Fiorentina side play and I like how he deals with the media."
Ancelotti dismissed speculation that Xabi Alonso could be set to leave Real Madrid amid reported interest from Juventus.
"No, he's happy with us and is too important for Real Madrid," he said.