The 54-year-old is concerned his side's exemplary attack could be undone by continued problems at the back and praised the "extraordinary" work of Juventus boss Antonio Conte.
Los Blancos have scored an average of just under three goals per game this season, but have conceded 16 times in La Liga alone, twice as many as fellow title contenders Atletico Madrid and Barcelona.
Former AC Milan coach Ancelotti is hoping his team can correct this problem as it looks to maintain its perfect record in the Champions League thus far when it travels to Turin on Tuesday.
"We've been conceding too many goals and this is our problem," he told reporters. "Everybody in the world knows how important the defensive work is. But we've scored 42 goals in 15 games, with an average of three goals a game."
Madrid has been boosted by the return to fitness of Raphael Varane, and Ancelotti confirmed the Frenchman will start the clash with the Italian champions.
"Varane will play tomorrow because he didn't play on Saturday and will be fresh," he said. "I'll choose between [Sergio] Ramos and Pepe to partner him."
Victory over the Bianconeri will guarantee Madrid's place in the last 16, but Ancelotti has warned of the danger posed by a side masterminded by the "extraordinary" Antonio Conte.
"Conte has done an extraordinary job. He is working at a club which he feels particularly strongly about, and in these three years, he’s done more than anybody could have possibly imagined, winning the title twice. He’s got a very competitive side,"Ancelotti said. "We need to rotate our team to have the freshest players on the field with the most physical strength, and I don't think rotating is a problem, although sometimes we lose our balance as a result and we need to improve this.
"It’s going to be an interesting game. Juventus have more difficulties than us in the group – this is a chance for us to seal qualification and the sooner you get that, the better."