The Parisiens' coach feels that his team can put some of this season's poor results behind it and catch the league leaders, if the players continue to apply themselves.
Les Rouge-et-Bleu have beaten both Valenciennes and Evian by four goals in recent weeks, reacting well to their 2-1 defeat away at Nice, and the Italian boss has been impressed by the side's displays.
"The character, personality and confidence that players have shown made me very happy," the 53-year-old former Chelsea boss was quoted in an interview with RMC Sport. "We must continue to have the same identity and the same attitude. The difference in these games [the wins over Valenciennes and Evian] was the attitude.
"There has never been a problem in training. Every day, the players were professionals. But sometimes, in the stadium, we had a bad attitude - too personal. But things have changed, obviously."
Lyon currently sits top of the league with 35 points from 17 games, with PSG only three behind, and Ancelotti acknowledges the great importance of Sunday's fixture between the sides.
"This is an important game for the top spot. After the defeat at Nice, we had to react and it was very well done. We are better," he added.
"This meeting is an opportunity to confirm the good things that have been made in recent matches. Leading the championship is not the most important [thing] for us. We must confirm our above reaction and show continuity in our game against a strong and competitive team."