Bayer Leverkusen ended the Bavarians' 11-year Bundesliga reign by securing the league crown two weeks ago but Ancelotti said European pedigree matters and the six-times winners will have extra motivation to win the last trophy they can fight for.
"I'm not worried (with being the odds-on favourites), but we are confident to face a team that, despite not having made a great Bundesliga, have had a great Champions League tie against Arsenal," he told a press conference on Monday.
"They have just eliminated a very strong team in Europe (Arsenal). In the Champions League, history counts a lot, it counts for them but that also plays in our favour."
Bayern reached the Champions League semis for the first time in four years with a 3-2 aggregate win over Arsenal.
The 14-time champions Real made the last four after knocking out holders Manchester City on penalties and are close to a record-extending 36th LaLiga title as they sit top with a 13-point lead over second-placed Girona with five games left.
Ancelotti said Bayern and Real are similar teams in the way they are able to adapt to different circumstances and that his side are bracing for the unexpected, with the German side's departing coach Thomas Tuchel eager to leave on a high.
"We are two teams that don't have a very clear identity ... and we can play the games in different ways," Ancelotti said.
"In terms of quality, they are strong in transition, they can change their style and they are very dangerous.
"But it's only the first leg, it's a 180 (minutes) tie which we face with confidence ... but in the knowledge that we are up against a quality opponent with very strong individuals."
Ancelotti did not want to give any clues as to his selection for Tuesday's match, with the biggest question being who starts alongside Antonio Rudiger in the middle of the defence.
France midfielder Aurelien Tchouameni has been impressive in defence in the absence of centre-back Eder Militao and David Alaba, who both suffered serious knee injuries, and could again receive his coach's vote of confidence in that position.
"(Tchouameni) will play tomorrow... But in which position? I don't know..." Ancelotti said.
Militao made his first start of the season in the 1-0 win at Real Sociedad on Friday after tearing his ACL in August.
