Real won Europe's premier club competition for the 10th time with an extra-time triumph against Atletico Madrid last month, as they added to their Copa del Rey success in Ancelotti's first season at the club.
Having dimissed rumours linking him with a return to Milan, Ancelotti is confident Real will continue to be a threat domestically and in Europe.
With established stars such as Cristiano Ronaldo and Gareth Bale, alongside younger prospects like Asier Illarramendi and Isco, Ancelotti predicts their Champions League triumph will begin a new cycle of success.
"This Champions League win is not the end of a cycle, but the beginning of one," he told Real's official website.
"We have a very young team that is full of talent. We have players who will improve next season such as those that arrived last summer - Illarramendi, Isco.
"I always believed Real Madrid had the quality to win it and I have always had supreme confidence."
While the likes of Ronaldo and Bale often stole the show in Ancelotti's maiden campaign in Madrid, defender Sergio Ramos also played a major role.
The Spain international scored twice in the Champions League semi-final second leg against Bayern Munich, as well as the late equaliser in the final that forced extra time.
Ancelotti drew comparisons between Ramos and former Milan legend Paolo Maldini - adding that the 28-year-old is the best defender in the world.
"After the winter break he was a different player and decisive in our title wins," the Italian continued.
"He has everything that Paolo Maldini had; personality, technical quality, the ability to be a leader on and off the field. I have never compared anyone to Maldini.
"Right now Sergio is the best defender in the world."
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