Los Blancos were beaten 1-0 by Atletico Madrid on Saturday and despite putting six goals past Galatasaray in their European opener two weeks ago, supporters are yet to be convinced by the club's stuttering league form.
The Italian coach admits he is using the air of dissatisfaction around the Santiago Bernabeu as a form of motivation.
"The fact that the fans are not happy with us motivates me. The team isn't playing very well because we have made many changes but I'm sure we will improve," the 54-year-old told reporters. "Losing a derby is not a good thing - we have to react soon by playing well and winning. I have a lot of confidence in my team and I'm sure we'll react well tomorrow."
Madrid striker Karim Benzema has been criticized for his recent form in front of goal, but both Ancelotti and teammate Sergio Ramos came to his defense and backed him to prove his worth.
"I don't know if Karim will start tomorrow, but if he does then I'm sure he'll have a good game," the former Paris Saint-Germain boss continued.
"In my opinion, Karim is one of the best strikers in the world," Ramos added.
Madrid tops Group B ahead of the game with Copenhagen a place further back having drawn with Juventus in its first Champions League tie.