The Brazilian attacker netted twice to end Madrid's hopes of winning the domestic league this season.
Celta recorded a 2-0 surprise win over Real Madrid at the Balaidos in Sunday evening's La Liga encounter to end the away side's title dreams.
Charles opened the scoring shortly before the break after some sloppy defending from Sergio Ramos, and the striker got his second goal of the game around the hour mark to effectively put the match to bed.
Madrid was hampered from the beginning, with a thigh injury ensuring that Cristiano Ronaldo could not even take a place on the bench.
Fellow big-money recruit Gareth Bale was among the substitutes, while Sami Khedira started a game for the first time since damaging knee ligaments in November.
It was the visitors who started on the front foot, their first opening coming when Marcelo's powerful half-volley was deflected just wide. But Celta began to press thereafter, with Fabian Orellana looking particularly threatening.
Ancelotti's side defended impressively to weather that spell without giving up any real chances and gradually began to impose its will on the game.
Madrid's attacking intent almost led to an opener in the 35th minute, with Isco forcing a superb reaction save from Sergio Alvarez with a low effort.
Another chance went begging when Alvaro Morata fired Marcelo's low cross wide — and Madrid was left to rue its profligacy as the home side took the lead three minutes before the break. Ramos was the culprit, his slip leaving Charles to round Diego Lopez and slide the ball into the empty net from a tight angle.
As expected, Real came out positively after the break and almost leveled matters when Luka Modric shot over in the process of being brought down in the area by Jon Aurtenetxe, with the referee turning down strong penalty appeals.
Undeterred, the visitors pressed forward further, with Morata and Isco again testing Alvarez. But the latter's chance, in which he shot straight at the goalkeeper, prompted an immediate reply as Celta increased its lead.
Marcelo was at fault this time, selling Lopez short with an awful back pass that allowed Charles to slip in and grab his second.
Real pushed desperately to get back into it late, but the inspired Alvarez combined with some dogged defending to keep them out.
All eyes will now turn to Camp Nou for next week, where defending champion Barcelona will host Atletico in a mouth-watering championship decider next weekend. Barcelona, which is three points adrift in second, will win the league with a victory while Atletico needs only to avoid defeat.