The Portugal forward struggled with a knee injury towards the end of last season and picked up a hamstring strain last month - missing out on Real's 4-2 defeat at Real Sociedad.
Ronaldo has not played since his side's 2-0 win over Cordoba on the opening weekend of the season and was omitted from the Portugal squad for the Euro 2016 qualifier against Albania.
However, Ancelotti says Ronaldo is ready to make his return against local rivals and reigning La Liga champions Atletico.
"He is on top form," he said. "He has been training very well these past three weeks and he does not have any problems.
"He is in optimal condition. He doesn't have a chronic injury.
"Last season he had one injury and now another. It's nothing chronic."
Ancelotti could hand a debut to deadline-day loan signing Javier Hernandez., but revealed he would not feature from the start.
"We are very happy with Chicharito," he continued. "Tomorrow he won't play from the beginning but he will be of use during the game."
Fellow new arrival James Rodriguez is yet to score a league goal since joining Real in the close-season, but Ancelotti believes the Colombian needs time to adapt.
"It's clear that a new player needs time to adapt," he added. "I am pleased with what he has done so far.
"It's normal that he might have the odd problem at the start."