The Shandong Luneng coach has hit out at the Italian over his attitude toward the young playmaker and has voiced his surprise with Iker Casillas' role in the side.
The 21-year-old initially impressed after joining Madrid from Malaga last summer, but lost his starting berth after a number of disappointing performances as Ancelotti opted for a more solid 4-3-3 system with Angel Di Maria alongside Luka Modric and Xabi Alonso.
Isco has since mainly been warming the bench at Santiago Bernabeu and Antic feels Ancelotti is wrong to focus on the Spain international's weaknesses in defending rather than his strengths in attack.
"Ancelotti has not been fair with Isco," Antic told Goal. "Ancelotti keeps on pointing at the defensive aspect of Isco's game. I think he's a tremendous player who adds something vital to the team, creating chances against a defensive opponent.
"Ancelotti is always looking at the player's weaknesses and this does not help to get the best out of Isco."
The Serbian also admitted he finds Iker Casillas' fall from grace in the Spanish capital to be odd.
"I do not really understand Real Madrid's position in this matter. It is a strange situation for me," he said.
"Something might have happened between Casillas and Jose Mourinho last year, but nothing has changed for him. I don't know the reason behind these decisions."