The French forward has missed Real's last two games with a thigh injury and was hoping to be fit, but did not train with the team on Saturday.
"Benzema will not make the game," Ancelotti told a news conference ahead of Sunday's derby at the Wanda Metropolitano.
"He has started to work individually. He'll stay here during the international break to be ready to return when La Liga is back."
The coach did not want to get involved in the controversy in Spain over forward Vinicius Junior's dancing goal celebrations, which some have labelled disrespectful.
"I am not his father, I am not his brother, I am just his coach," said Ancelotti. "He is playing football with the joy that he has, with the happiness that he has."
Atletico Madrid will have goalkeeper Jan Oblak back from injury, after he missed the 4-1 win over Celta Vigo in La Liga and Tuesday's 2-0 defeat at Bayer Leverkusen in the Champions League.
Simeone confirmed the Slovenian was ready to play, and said his team are capable of upsetting their rivals, who have won all eight game across all competitions.
"I always think in the big games and derbies it is important how you arrive, but the moment that you start the game, it's a new story," said Simeone.
"Everything is all very well until the referee blows the whistle, then it's a new film and we don't know the ending. That's why this game is so fun."
