The Spain international has yet to feature for the Liga giants this season, after undergoing surgery on groin and foot injuries.
But the 31-year-old has stepped up his recovery in training, and Ancelotti says he could be in line for a place among the substitutes.
"He is available," the Italian said. "He is training with the team and I think tomorrow he may start on the bench and try to give him minutes on the pitch.
"He has all the quality to help the team to play better. He has experience, quality and a good attitude.
"He is a very important player for us."
Asier Illarramendi arrived from Real Sociedad in the close-season, and the midfielder is normally employed in a deeper role similar to that of Alonso.
And Ancelotti conceded it would be difficult to utilise both players in his starting XI.
He added: "Illarramendi played well against Barcelona because he worked hard and recovered many balls.
"Clearly he is good on the ball and has the same characteristics of Xabi Alonso.
"Alonso's presence can help us improve, but it's hard to play (them) together with our 4-3-3 (system)."
Real are looking to bounce back quickly from Saturday's 2-1 defeat to Barcelona in El Clasico and Ancelotti called on his charges to show more intensity against Sevilla.
"We are very close to the game we're trying to play," he continued. "Against Barcelona we lacked continuity.
"In the second half we had control of the game and played with intensity. You have to play every minute with the same intensity."