The Real Madrid coach felt the referee's decision Sunday was harsh for the Ballon d'Or winner.
The forward was shown a straight red card after an altercation with Carlos Gurpegui and Ander Iturraspe in the 76th minute, but Ancelotti feels the Portugal international did not deserve to be sent off for his role in the incident.
"It's tough for me to say because I was not close to it, but the pictures show that it was a bit exaggerated," the Madrid coach told reporters when questioned about Ronaldo's dismissal.
Ancelotti then went on to acknowledge that Ronaldo's red made things difficult for Madrid, but he was pleased with the final result, despite missing the chance to take full advantage of Barcelona's 3-2 defeat to Valencia on Saturday.
"It was difficult to try to win the match with 10 players, especially because some of them were tired," Ancelotti said. "I made changes, but not because I wanted to try to win the match, more to put on fresher players to help the team at the end. It was a good match overall, especially the second half.
"The team was well-balanced, but Ibai’s goal was a fantastic strike. We did not make any mistakes, it was a great goal. We hardly let them have any chances — just one in the first half and none in the second half."
Madrid sits third in La Liga, trailing Atletico by three points.