The Rojiblancos have been battling at the top all season and, ahead of the Madrid derby this weekend, the Santiago Bernabeu coach was eager to praise Diego Simeone's side
Diego Simeone's men have fallen off the pace a little in recent weeks after a relative slump in form, but they remain only three points off the summit heading into this weekend.
Los Blancos moved a victory clear at the top of the table last week as both Atletico and Barca suffered surprise defeats, but Ancelotti was nonetheless quick to lavish praise on their local rivals for the fight they have shown so far in 2013-14.
"It's a very interesting league campaign, it's very exciting," he told Canal Plus. "There are three brave, strong sides battling for the title.
"It's a surprise because I thought that it would be between Barcelona and Madrid but Atletico are doing a fantastic job. It's very surprising to see that at this level that being on 60 points is not enough to be top of the table.
"They could perfectly play in any league. They know what their shortcomings are and they exploit their qualities: punishing their opponents on the counterattack and from set pieces.
"They are an efficient team. Atletico are just like Simeone was when he was a player: they give their all and play as a unit."
Real Madrid made a mockery of Atletico in the Copa del Rey semi-finals earlier this month, beating them 5-0 on aggregate to avenge their defeat in cup final to their rivals last season and a 1-0 loss at the Santiago Bernabeu in September.
"Both of those games gave us confidence because in the league derby we had problems against them," Ancelotti added.
Real Madrid's visit to Atletico kicks off at 16:00GMT on Sunday.