Speaking in an entertaining mixture of Spanish, French and his native Italian, Ancelotti told reporters at the Bernabeu stadium his goal was to help Real win a 10th European title and replace arch-rivals Barcelona as the dominant club in Spain.
Flanked by Emilio Butragueno, a club director with whom he locked horns when they were players in the 1980s, he confirmed former France and Real midfielder Zinedine Zidane would be one of his assistants on the bench along with Englishman Paul Clement.
"I love football and that's why Real Madrid is a dream for me and today that dream is coming true," Ancelotti told the packed press room in the bowels of the giant arena.
"I don't think Real Madrid will be the end of my career but my hope is that I will be here a long time," added the 54-year-old, twice a Champions League winner with AC Milan as both player and coach.
Real president Florentino Perez lured Ancelotti from French champions Paris St Germain following last month's departure of Jose Mourinho, three years before the end of his contract, after a season without major silverware.
Labelled "the pacifier" in Spanish media, the laid-back Italian is an entirely different character from the combative Portuguese, who clashed with key players, divided fans and had a testy relationship with journalists.
"I have a different character (to Mourinho) but I have total respect for him," Ancelotti said.
"I don't think it's possible to compare Mourinho and me. I am focusing on my work and the president will decide if it has been good or bad."
Real have not been crowned champions of Europe for more than a decade and Perez, a construction magnate in his second stint as president, made clear at an earlier presentation that winning the Champions League was the overwhelming priority.
"It's a great goal for the club, for everyone," Ancelotti said.
"I have the ambition, the responsibility for that. It is a huge motivation.
"I don't think here the pressure here is any greater than other clubs.
"It's part of the coach's work. The problem is to deal with it but it's normal."
Getting the better of Barca, who knocked his PSG side out of Europe last season, will be one of Ancelotti's biggest challenges.
"They are the most competitive team in Spain but I think that we are perfectly capable of taking them on," he said.
"I expect some fantastic games and I don't think Real Madrid is in any way inferior. I am confident that Real Madrid will have the edge."
He gave little away about possible player purchases, saying the transfer market would be discussed in coming days.
"We really haven't talked about the market yet. I can't give you any information about the players that will come in."
Malaga playmaker Isco, a key performer in the triumph of Spain's Under-21 side in this month's European Championship, has been identified as a possible recruit in the short term with local media reporting he will be presented on Friday.
"I can only speak about his quality which is very high," Ancelotti said. "He can play at Real Madrid just as he can play in any team."