Terry remains skipper at Chelsea though and in Sunday's home game against Arsenal received strong backing from Blues fans, as well as a statement of support from team-mate Didier Drogba in a post-match interview.
Ancelotti is adamant that the scandal has not affected his team at all and is unwilling to let private matters impact on Terry's standing at the club.
"(Terry) has maintained the captaincy because it's not my role to monitor the private life of my players, unless this affects their performances," Ancelotti told La Repubblica
"For myself and for the club, he is a great captain, a serious professional, a leader and a player who has great closeness to this club, because he grew up in the Chelsea academy.
"I guarantee that it has not affected the team in the least. We will prepare well for the Champions League (fixture against Inter Milan on February 24)."
Ancelotti has also played down speculation that he could succeed Marcello Lippi as Italy manager in the future. Lippi will lead the Azzurri at the World Cup finals in South Africa.
"I will not be there once Lippi leaves," Ancelotti said. "I have a contract with Chelsea. I will be a candidate in 2030 when Italy will win the World Cup.
"I have studied the stats and after the second World War, we have won the World Cup title every 24 years and reached the final every 12 years. Hence, the 2018 final I leave it to someone else.
"Besides, before I leave Chelsea I would like to win the FA Cup, the Premier League and obviously, the Champions League. I am in no hurry. There is a lot of competition here."