Ozil was seen as the creative linchpin in the Blancos side since his move from Werder Bremen in 2010 and has more assists than any other footballer in the top five leagues in Europe over the last five years.
Despite the loss of the 24-year-old Madrid has been in free-scoring form, beating Galatasaray 6-1 in the Champions League and following that up with a 4-1 victory over Getafe, leading to Ancelotti's firm belief his side will not miss the talented German in attack.
"Ozil has great attacking qualities, but in the last two games against Galatasaray and Getafe we have played without him and we've had no problem scoring goals. We scored 10 and we could have scored 15," he told reporters.
"We are still very good going forward even without Ozil."
Ancelotti's men face La Liga newcomer Elche on Wednesday and will be able to welcome back Raphael Varane and Fabio Coentrao to the squad.
Elche may be a relegation candidate, but the Italian coach insisted his side will be respectful of its opponent, having already faced Villarreal - another newly-promoted club - and drawing 2-2 at El Madrigal this season.
“We have to be careful with this game because we have the experience of Villarreal, where we played a very tough game. Teams face us with ambition," he continued. “They won the Segunda Division last year and will play against Madrid with great determination.
“First-team plans? We have recovered Varane and Coentrao, they are available. The important thing is that they have recovered well. We have a lot of competition in every position and I will play the one I believe is best for the game. Marcelo will be available for Saturday.”
Ahead of the first Madrid derby this season, Ancelotti admits he has been surprised by the level of performance shown by his team's neighbor and believes there is still more to come from his own side.
“Atletico are playing very well. They put in great performances in the Supercopa, and although Barcelona are always competitive, Atletico have surprised me more," he added. "They have the same spirit as their coach Diego Simeone, a man with a lot of character.
"We are improving. We've had some good matches, but we need a bit of consistency."