Hazard, 31, was a bystander as Madrid lifted the LaLiga title last month -- having undergone an operation in March to remove a plate in his right leg -- but is back in the squad for Sunday's game at Cadiz.
"His plan is quite clear. He stays," Ancelotti told a prematch news conference on Saturday. "He has a lot of motivation because he hasn't had a good time these last few years and he wants to show all of his quality, which for many reasons he hasn't been able to do."
Hazard signed from Chelsea for €100 million in 2019 as one of the Premier League's outstanding players, but a series of ankle and related muscular issues have seen him unable to make an impact in Spain.
He has made 17 appearances in LaLiga this season, 10 of them off the bench, without scoring any goals, after Vinicius Junior established himself as Ancelotti's first choice left winger.
It is hoped that the removal of the metal plate -- which was inserted during ankle surgery in March 2020 -- will allow Hazard to stay injury free.
"With a squad at the level of Real Madrid you play a lot of games," Ancelotti said. "There's tiredness and we'll rotate, even if we haven't much this year. With a more complete squad you can rotate more and everyone can have their chance."
"I think the quantity of minutes isn't so important, it's about the quality," he added. "We have a clear example which is Rodrygo -- he hasn't played a lot of minutes but he's played with great quality and made the difference."
After Mbappe paid a flying visit to Madrid earlier this week -- eating lunch with Paris Saint-Germain teammate Achraf Hakimi -- Ancelotti described the Spanish capital as a city "to live in, not to come on holiday."
"It's an informal city, where the people are more happy than angry," he said. "You live well, eat well, there's a good atmosphere. The climate helps a lot."
Ancelotti said he agreed with opponent Mohamed Salah's assessment that he's the best in the world in his position.
"I think he's right, as a left-footed right winger," he said. "It isn't easy to find someone like him in the market... In his position, he's the best in the world."