The German international, who has made 21 league appearances for leaders Real this season, was substituted early after sustaining an injury during Thursday's 2-0 win at Getafe.
"He's improved a lot in the last few days. I expect the same improvement between today and tomorrow," Ancelotti told reporters.
"It's a muscle strain. He will be in the squad and I will decide tomorrow if he plays or not."
The Real manager named Eduardo Camavinga, Ferland Mendy and Dani Carvajal as his alternatives in case Rudiger is unable to play on Sunday.
"Camavinga can also play as a centre-back. He brings the ball out very quickly, he is quick and strong in tackles," he said.
"All three options give me confidence and I think they can do very well tomorrow."
Real will also miss another key figure in defensive midfielder Aurelien Tchouameni, who has been suspended from the derby match against third-placed Atletico after picking up five yellow cards in the league.
Ancelotti played down Barcelona president Joan Laporta's earlier comments alleging Real affect referees through their TV channel.
"I'm a professional and as a professional, I don't want to drop this level out of respect for Spanish football... I don't want to go down to a level that is not for professionals," the Madrid manager said.
Real have 57 points after 22 matches, ahead of Atletico and Barcelona by 10 points. Real will be looking to avenge their 3-1 league defeat at Atletico last September.
