According to reports in Spain, Porto have accepted a €25 million bid for the Brazil international, who will imminently sign a six-year contract with Los Blancos.
Ancelotti was thus asked at a press conference on Friday if he has already spoken with Dani Carvajal and Alvaro Arbeloa about the imminent arrival of another right-back.
"I don't need to talk to them about this Danilo issue," the Madrid boss told reporters in the Spanish capital.
"They know not to listen to rumours during this stage of the season. We have not really talked about Danilo. We do not talk about signings.
"Of course, I know all the players in Europe, because I keep track of all the championships. I also, of course, know Danilo.
"I like him, but I like many other players now in Europe ..."
Meanwhile, Ancelotti revealed that Martin Odegaard is unlikely to become the youngest player ever to appear in the Champions League, explaining that Luka Modric's return to full fitness means that the 16-year-old Norwegian will not be called upon for Tuesday's last-16, second-leg clash with Schalke.
"Odegaard is doing well, following his plan," the Italian added on the eve of Saturday's Liga trip to San Mames to face Athletic Bilbao. "He's doing very well. He has quality and personality.
"But I do not think he will be on the squad list for Tuesday because Modric is ready, and I think we will have a full squad.
"Modric will not be in the squad against Athletic, though. He will continue with his fitness program and make it for Tuesday against Schalke.
"As for Saturday [against Athletic], I also have injury doubts over Lucas Silva, Asier Illarramendi and Sami Khedira.
"Sergio Ramos will begin training on Sunday. I think he will be available for the match against Levante [on March 15].
"James [Rodriguez], though, has not yet started training again."
Madrid can pull five points clear at the top of La Liga by winning at San Mames, with Barcelona not hosting Rayo Vallecano at Camp Nou until Sunday.
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