The Portuguese full-back received his second yellow card for a challenge on Osasuna's Oier Sanjurjo in the 85th minute with the victory already sealed through goals from Cristiano Ronaldo and Angel di Maria.
Coentrao has been heavily linked with a move to Manchester United during the January transfer window but Ancelotti stressed the importance of the versatile 25-year-old, who he believes was unfortunate to be dismissed.
"I think he was unlucky being sent off but he completed a good game in terms of defensive and offensive aspects," Ancelotti said.
"I think he is very focussed on his job - he is really important for us.
"He didn't make mistakes after a long time not playing and we have to appreciate his performance tonight."
Arsenal transfer target Alvaro Morata departed the field of play late in the match after copping a hand to the face but Ancelotti was confident the injury was not significant.
"He has received a hit in his eye and I don't think it's a serious injury," Real's boss said.
"He was not comfortable because his eye is swelled up but nothing more."
Despite the spate of bad luck toward the end of the match, the Italian tactician was delighted with his team's performance and is confident they are focused as the business end of the season approaches.
"We did control the game (against Osasuna) from the beginning," Ancelotti said.
"We scored early and it is true that it was not so difficult because we put in a great defensive effort.
"I think it is becoming the most difficult time of the season because every single game is really important now.
"We don't play amazing football always but we have plenty of games at this moment and it's not so easy to play all the time at a high level.
"The team is composed and full of energy to face the future."
