The Paris Saint-Germain coach was reported to be considering an £8 million bid for the England international having failed to sign Milan defender Thiago Silva.
While Ancelotti is keen to strengthen his squad in anticipation of the new Ligue 1 season, when asked at a press conference whether Terry was an option, he responded: "No."
PSG signed Napoli forward Ezequiel Lavezzi for a reported 30 million euros on Monday afternoon and Ancelotti is still looking for further additions.
"I think three or four players will happen, if you include Lavezzi," said Ancelotti.
"The club talks with some players and I think we are well positioned."