His first task was to unify a squad that had been divided by the man in the hot-seat prior to his arrival.
Jose Mourinho is an all-or-nothing manager, and he left Madrid having won nothing but the Super Copa in his final season.
Instead, many of the players were at loggerheads with each other, with the main issue being Iker Casillas’ expulsion from the first team, a Madrid legend left on the bench.
Alvaro Arbeloa, Diego Lopez, Xabi Alonso and Michael Essien sided with Mourinho, while Sergio Ramos was noted to be in opposition to the coach, along with many others in the squad.
Ramos said, during a heated row, as per the Daily Mail: "As you have never been a [professional] player, you wouldn’t know that this is sometimes necessary."
Ancelotti also shows he knows how to play catch-up, with Madrid cutting back Barcelona and Atletico Madrid’s lead of five points and ending up four clear of the Catalans before the Clasico in March.
Madrid went on a fine stretch of victories at the start of 2014, with eight wins in January and no goals conceded.
At times they looked unplayable, and after Cristiano Ronaldo was sent off against Athletic Bilbao on February 5 he went on an amazing scoring run that was only curtailed by his recent injury.
Ronaldo was rested for a tricky trip against Real Sociedad because of fears over a knee injury, but what’s now going to keep him out for 15 days is a hamstring problem.
Does Ancelotti deserve another year?
Two areas which Ancelotti has improved greatly are the style of football and individual player development.
The Italian has won over the Bernabeu faithful, who whistled him earlier this season.
Although the whistles returned after a double defeat—to Barcelona in the Clasico and then again against Sevilla—Ancelotti retains the support of many Real Madrid fans.
His team play a far more vibrant, entertaining style of football than Real did under Mourinho.
Ancelotti has also done a good job with a couple of Real’s younger players.
Jese is the main beneficiary, with the forward even being mentioned as a possibility for the Spain World Cup squad, before his injury in March.
The Spanish striker was given several chances by Ancelotti to show off his pace and skill, and he rewarded his manager with three goals in consecutive league games in February.
Dani Carvajal has also progressed under Ancelotti’s tutelage, improving this season when asked to step in at right-back.
Although Luka Modric improved toward the end of last season, only under Ancelotti has the Croatian truly sparkled.
He has been one of the finest players in La Liga this term, controlling games for Real Madrid and receiving the plaudits for his displays.
Marcelo has also thrived under Ancelotti. Others believed the Brazilian to be too attack-minded and incapable of defending, but he has improved at the back, while still offering a distinct forward threat.
That’s not to say things have gone perfectly for him since arriving at the Bernabeu, as testified by the league table.
As mentioned earlier, Madrid did extremely well to come back from five points behind and top the table, but they have since contrived to lose their lead.
First came the thrilling 4-3 Clasico defeat at the Bernabeu that could have gone either way, before they fell to an Ivan Rakitic-inspired Sevilla.
Ancelotti has not done well in the big games this season, exemplified by two defeats to arch-rivals Barcelona and one to city rivals Atletico, as well as another draw with the latter.
That must be improved upon next term, because a team like Madrid expects to get the better of their rivals more often than not.
They are not favourites to win La Liga, needing Atletico to falter, but they could win the Copa del Rey and the Champions League.
Achieving La Decima by winning the latter would put Ancelotti into the history books at the Bernabeu forever.
However, if it doesn't happen and Real Madrid supporters decide they don’t want him in charge next season, they should ask themselves: who would be a better option?