Belgium international Hazard has struggled at Madrid since completing his reported €100 million ($151.6 million) move from Chelsea in June 2019, with injuries and fitness issues hampering the forward.
Hazard has managed just seven starts for his 17 LaLiga appearances and 688 minutes this campaign as Madrid cruised to its 35th league title.
However, the 31-year-old appears to be a favourite with his team-mates in the Spanish capital after being seen to be encouraged to join in with celebrations after both LaLiga success and the UEFA Champions League semi-final victory over Manchester City.
Ancelotti, speaking before a trip to Cadiz on Monday (AEST), has made it clear he intends to keep Hazard at Madrid.
"I have not talked about continuity. He stays and with a lot of motivation because he has not had a good time. He wants to show his quality. Hazard's plan is clear: he stays," Ancelotti said.
Asked if Hazard is likely to feature at Cadiz as Ancelotti rotates ahead of the UEFA Champions League final with Liverpool on 29 May (AEST), the Italian responded: "I think so. In a squad like Madrid's there are many games.
"There will be rotations. With a more complete squad you can rotate more and everyone can have opportunities. Being a starter in a great team is very complicated. For all, not only for those who play less.
"I think it is a locker room of a very high level. Professional, first, there are no arrogant people. Everyone is very humble and very respectful. It is a locker room that has a lot of quality of character.
"It hasn't been easy to find changing rooms like this in my career.
"The number of minutes is not important. We have the example of Rodrygo. He has not played many minutes, but they have been quality when he features."
Ancelotti also confirmed he plans to rest Karim Benzema again, with Vinicius Junior and Thibaut Courtois also in line for a break.
"I have given him rest because he deserves it," he said of Benzema. "I have given him two days. Tomorrow I will also rest Vinicius and Courtois. They will be back on Tuesday [Wednesday AEST].
"[Dani] Carvajal, [Dani] Ceballos, Hazard are back... We're doing the plan well and next week they'll all be back."
As for the future of captain Marcelo, Ancelotti promised to open talks at the end of the season, while he heaped praise on the likes of Federico Valverde, Rodrygo and Eduardo Camavinga.
"Everyone has done their job. The ones I knew less about have surprised me: Valverde, Rodrygo, Camavinga. Vinicius has not surprised me because he has that talent," he continued.
"He has been more successful in finishing. I would say Rodrygo, Camavinga and Valverde are the three, though."
Madrid has won both of its past two visits to Cadiz in LaLiga (2-1 in August 2005 and 3-0 in April 2021), and could record three such straight away wins for the second time in the competition (three between 1987 and 1990).