The two teams were paired together in Friday’s draw, with reigning European champion Bayern the bookmakers' favorite to lift the trophy, but Ancelotti also insists the Bavarians should be worried at the prospect of facing his side.
"Guardiola is one of the best coaches in the world. They (Bayern) have a great team,” Ancelotti said at a press conference. "The semifinals against Bayern will be very difficult but it's not easy for anyone to play Real Madrid either.
"If we want to win the Champions League, we then have to beat everyone including Bayern."
Madrid scraped through to the semis after nearly squandering a commanding first-leg advantage against Borussia Dortmund.
The nine-time European champion arrived in Germany with a 3-0 lead but lost 2-0 on the night and was forced to endure some nervy moments before securing progression.
"Yes, we were poor against Dortmund but it doesn't matter because we made it through to the semifinals,” added Ancelotti.
The other last four tie sees Atletico Madrid meet Chelsea.
Ancelotti said: “Atletico are the surprise. They are having a fantastic season and their semifinal against Chelsea will be balanced.”