The Frenchman was angling for a move to the Spanish capital all summer, and PSG received a huge offer of €220m from los Blancos which they swiftly knocked back.
PSG's refusal to sell Mbappe, whose contract in Paris expires at the end of the season, frustrated both Real Madrid and the player, but Ancelotti has stated that the club are not dwelling on the situation.
Speaking ahead of the Spanish giants' clash with Celta Vigo, the Italian coach was quick to praise Mbappe, calling him a "great player" and wishing him luck for the future. However, he also backed his squad to cope without the presence of the World Cup winner.
"There is no disappointment, but it is clear that he is a great player and we wish him luck," Ancelotti said. "We have a very strong squad."
The Mbappe transfer saga may have come to a temporary halt - with the window now shut until January - but the 22-year-old has made it clear that he will not sign a new contract at PSG.
Real Madrid remain in pole position to sign Mbappe and they can begin negotiating a move to the Bernabeu for free in January - indeed, 90min understands he has yet to come to an agreement over personal terms even though it is clear he wants to move to the Spanish capital.
PSG continue to harbour hopes that Mbappe can be persuaded to stay in order to play against Lionel Messi and Neymar, with president Nasser Al-Khelaifi even saying after the capture of Messi that Mbappe has 'no excuse' not to sign a new deal.
“I think everyone knows what Kylian's future is: he is Parisian. He's said that he wanted a competitive team - there's no excuse to do anything else now.” Al-Khelaifi boldly remarked.
For now, Mbappe must get on with scoring goal after goal in Ligue 1, something he did on Saturday in the convincing 4-0 win over Clermont Foot in Ligue 1.