Real Madrid blew a chance to ramp up the pressure on La Liga leaders Barcelona in the title race as they fell 2-1 at Villarreal in a disjointed display on Saturday.
Yeremy Pino and Gerard Moreno's strikes either side of Karim Benzema's penalty were enough to give the hosts a sixth consecutive victory across all competitions and dent the Spanish champions' bid to retain the trophy.
Madrid's slim Spanish Cup victory over fourth-tier opponents Cacereno was followed by this bruising wake-up call at the renovated and newly reopened Estadio de la Ceramica, their second league defeat.
"The game was well-fought, well competed, (but) Villarreal played better than us," Ancelotti told reporters.
Ancelotti selected a Madrid starting line-up without a Spanish player in it for the first time in the club's history, according to media reports in Spain. Los Blancos have struggled away at Villarreal in recent years, with two wins in 11 visits, the last coming in 2017 when Cristiano Ronaldo, Gareth Bale and Alvaro Morata were on the scoresheet.
Quique Setien's side, fifth and building confidence after a tough start for the former Barcelona coach, comprehensively outplayed Madrid in the first half.
Francis Coquelin hit the post with a wonderful flick from Alberto Moreno's cross and Thibaut Courtois brilliantly thwarted Pino.
Madrid, still suffering after the World Cup break, began to pry themselves towards the end of the first half. Madrid travel to Saudi Arabia next to take part in the Spanish Super Cup -- but first they face an anxious wait to see if Barcelona drop points in the capital.