Sunday's damaging 2-1 defeat at third-placed Lille left the Italian's Qatar-backed side five points adrift of a modest-spending Montpellier and in danger of being further behind before they host in-form Saint-Etienne on Wednesday.
"There are still four games to play, it's not finished," Ancelotti told reporters after the Lille game.
Montpellier have 72 points, PSG are on 67 with defending champions Lille suddenly back in contention for an automatic Champions League spot a further two points behind.
"We have not lost the title yet, we have to believe everything is possible, it will be more difficult but it's not over," the Italian added.
While Ancelotti has yet to give up on the title race, his players appear to believe the gap at the top is insurmountable.
"We now need more than a miracle," midfielder Momo Sissoko said.
"We can forget the title," goalkeeper Salvatore Sirigu, one of PSG's high profile signings, added.
"If Montpellier let it slip away, they're stupid."
Sirigu's frank assessment was dismissed by Montpellier coach Rene Girard, who preferred to turn his attention to the side's next fixture.
"I'm not listening to that kind of comment," Girard said on sports daily L'Equipe's website on Monday.
"Pressure is here but that is what drives us. Pressure can be positive.
"When you're a coach, what matters is the following game. You can only celebrate what you have won."
Lille will continue their quest for an automatic Champions League spot at Nice on Wednesday.
"We're in money time. Every point will count, starting with those we scored tonight," coach Rudi Garcia said after the win over PSG.
Stade Rennes are fourth on 57 points and they travel to Girondins Bordeaux on Wednesday looking to secure a Europa League spot.
Olympique Lyon, in fifth place, have a game in hand and lie one point behind Stade Rennes ahead of their Wednesday fixture at home to Valenciennes.
Should French Cup winners Lyon move up a spot by the end of the season, the team that finishes fifth will also secure a Europa League berth.
