The former AC Milan boss feels the Catalan giants are the benchmark to aim for, while is also resigned to missing out on reported targets Daniele De Rossi and Wesley Sneijder
The 53-year-old has steered Les Parisiens to the top of the standings in France whilst also beyond the group stages of the Champions League this season.
And the Italian coach believes that along with the Serie A leaders, the Ligue 1 outfit are in the hunt for European silverware but must overcome an almost insurmountable challenge in the face of Barcelona.
“Italian football is still of the highest level,” the Italian told Corriere dello Sport. “Juventus, for example, are really strong.
“In Europe, Barcelona are the only unreachable team. But, behind them, there is a group of sides which include Juve and my PSG.”
Ancelotti has hinted about strengthening in the transfer window in January but has played down his side’s chances of signing Daniele De Rossi, believing that the Roma midfielder is currently content in Italy.
He added: “De Rossi won’t come to Paris.
“If I was to make a prediction then it would be that Daniele will stay in Rome for a long time because that is his home."
Ancelotti, who won two European Cups as a player and the same number as a coach with Milan, also quashed rumours of a move for Inter playmaker Wesley Sneijder, who is rumoured to be discontent with life at the Nerazzurri.
Ancelotti added: “Sneijder? When he’s fit he is a great player, but he won’t come here unless on holiday.”PSG, who are top of Ligue 1 but level on points with Olympique Lyonnais and Marseille, have improved after a tough beginning to the winter, winning four consecutive league games without conceding, and Ancelotti has been delighted with the response shown by his players.
He said: "There was a period of difficulty and some inside the club were nervous, but now the situation has improved.”