Portuguese superstar Ronaldo was booked for simulation in Wednesday's 2-0 win at Rayo Vallecano and was due to be suspended for Saturday's clash at the Santiago Bernabeu as it marked his fifth booking of the season.
However, Real appealed against the decision and the Spanish Football Federation rescinded the yellow card on Friday.
Ronaldo now has the chance to continue his incredible form, which included a five-goal haul in the 9-1 battering of Granada last weekend and the opener in the Vallecano victory.
It also softens the blow from the absence of Gareth Bale (knock), who is being rested with one eye on Tuesday's UEFA Champions League quarter-final first-leg tie at rivals Atletico Madrid.
And with James Rodriguez, Toni Kroos (both suspended), Sami Khedira (back) and Fabio Coentrao (knee) all unavailable, Ancelotti will be delighted to have his talisman in contention.
Real may have bounced back from their Clasico defeat by picking up back-to-back wins, but they remain four points adrift of leaders Barcelona at the top of La Liga. And Ancelotti is wary of the physical demands on his team considering the quick turnaround in matches.
"It could be a tough game for us because it comes just after two-and-a-half days after an intense game. We have to give everything for this game. We are obliged to win, to not fail, to keep winning and keep fighting until the end for the league," he said.
"I'm just thinking about winning, it's a difficult game without much rest after the last game. We're focused on this to just try and win this game. Obviously we want to do well and show a good attitude like we've had in the last two games.
"It will be tough because we haven't completely recovered."
Real comprehensively beat Eibar 4-0 in November's reverse fixture - a match in which Ronaldo scored two of his 37 La Liga goals this term.
Gaizka Garitano's side have not won away in the league since January, but a 1-0 victory against Malaga last weekend did at least arrest a worrying 11-match winless league run.
Despite their recent form away from home, Garitano insists his team are capable of competing against Real.
"It's an honour to go there to play," he said.
"It's a privilege the players have earned in recent years. The only way to enjoy the experience is by going there, doing well and making it difficult.
"The only thing I care about is that basically there are three points available. I'm not stupid and I know it is very difficult, but it is not impossible."
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