Back-to-back draws against Valencia and Real Valladolid preceded Sunday's trip to Celta Vigo, meaning that their hopes of challenging for the championship had all but ended prior to this weekend.
As it is, they must now watch on from the sidelines as Barcelona meet Atletico Madrid in what will effectively be a title decider - after a double from Charles gave Celta a 2-0 victory to confirm Real's fate.
That proved particularly frustrating for Ancelotti given their trio of decisive slip-ups came after Real's 4-0 UEFA Champions League semi-final triumph at Bayern Munich, which sealed a 5-0 aggregate success.
They are still on course for an historic Decima in Europe, but the Italian conceded that they had failed to match those standards domestically in recent weeks.
"It is true that in the last three games we have not done well," said Ancelotti. "From the semi-finals, we have lowered the intensity and paid dearly."
For Real, all eyes now turn to Lisbon, where they will tackle city rivals Atletico in the final of Europe's premier competition on May 24.
Ancelotti added: "We now need to look at what we have done well to recover energy and recover the players for the final."
There is, though, plenty of cause for concern ahead of that point, with Cristiano Ronaldo missing out against Celta altogether due to a thigh strain, while Gareth Bale settled for a place on the bench having not been deemed 100 per cent fit.
Ancelotti revealed: "Bale was not 100 per cent and I did not want to risk Cristiano. He had treatment this morning and is almost recovered; I think in the end he will play the next match against Espanyol."
