Jese sustained knee ligament damage in Tuesday's UEFA Champions League last 16 second leg clash with Schalke, which Real won 3-1 to seal a 9-2 aggregate success.
The 21-year-old forward, who has won plaudits for his excellent form in this campaign, will now miss the remainder of Real's quest for the treble as the capital club aim for silverware in La Liga, the Copa del Rey and the Champions League.
But head coach Ancelotti, who suffered a knee injury that kept him out for several months during a spell with Roma in the early 1980s, insists that the Spain Under-21 international can still enjoy a bright future.
"We've been unlucky with Jese's injury. We can confirm it's a cruciate ligament injury and his season is over," Ancelotti said.
"He had been doing very well for his first season in the first team.
"The same thing happened to me at the same age and I still had a career. I came back.
"Even after this injury I'm sure he will remain important to Madrid. We'll wait and see but good luck to him.
"These things happen in football and we have to know how to deal with them.
"We have to be positive. We've lost someone important. He's given us a lot this season, especially when Cristiano Ronaldo hasn't been available.
"There are things though that can happen in a career."
The injury ends any hopes that Jese had of earning a call-up to Spain's FIFA World Cup squad.
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