The Frenchman is being plagued by fitness problems but los Blancos are hopeful he will be fit to feature at the Santiago Bernabeu in the massive clash with Barcelona
The 26-year-old striker netted twice in los Blancos' 6-1 first-leg win in Gelsenkirchen, but a leg injury he picked up against Malaga at the weekend keeps him out of the return leg.
"Benzema can't play tomorrow [Tuesday] but we are confident he will be fit for Sunday," Ancelotti stated at a press conference.
"Benzema is a very important player, but we are lucky to be able to replace him when he is injured."
The Madrid coach then went on to stress that the game against Schalke is the perfect preparation for the upcoming Clasico.
"Sunday's match will be very balanced," the former AC Milan boss mused. "We have to play well against Schalke because it's a very important match. We have to be consistent.
"Playing well is the best way to prepare for the Clasico."
Ancelotti also revealed that a number of players will be rested against Schalke as talented youngsters such as Jese and Alvaro Morata will get the chance to prove their worth.
"We will make a few changes because some players are physically tired. Jese, Ronaldo, and Morata will all start," he declared.
"Isco will play if I don't change my mind. Isco and I are confident he can play well in midfield."