The Colombia international scored twice at the Estadio Nuevo Los Carmenes, while Ronaldo found the net once and provided a superb assist for Karim Benzema to cap an impressive display.
"James scored a fantastic goal and Cristiano Ronaldo gave a fine assist for Karim. It's getting harder and harder to talk about Cristiano Ronaldo. He is a fantastic player," Ancelotti said at his post-match press conference.
The Madrid coach also had his say on the situation of Gareth Bale with the Bernabeu side in fine form during the Wales international's absence due to injury, and insisted that there is no problem with the former Tottenham star.
"Everyone seems to think Bale is a problem for Madrid, but I think he will only help us get even better," he continued.
"I am very happy with how the team has been playing, but we must continue to search for something extra."
Ancelotti then went on to praise his side's performance against Granada following the comfortable away win.
"We always remained focussed, worked hard and made sacrifices. Everything goes fine so long as you keep fighting.
"We have to keep going and extend our winning streak. We are playing well and keep winning."
Madrid resume match action on Tuesday when they meet Liverpool in the Champions League.