Madrid watched on as Barca opened the scoring before Cristiano Ronaldo levelled things up in the 31st minute. However, Los Blancos found themselves trailing 2-1 in the 56th minute when Barcelona striker Luis Suarez scored a spectacular goal.
Madrid failed to take advantage of the numerous opportunities they had to claw their way back into the match and could not find the equaliser they craved.
"We played well for the first hour, but the last half hour was terrible," Ancelotti said after the match. "It is a blow, but we won't give up. We lacked a cool head to try to equalise rather than playing long balls.
"We played a lot better until the second goal. After that it was very difficult.
"In the first half we played very well, we had control, were dangerous up front and solid at the back."
Despite the loss, Ancelotti lauded Ronaldo for his valiant effort throughout the match.
"Cristiano Ronaldo played a very complete match," he said. "He worked hard and was always dangerous up front. He shot dangerously, he hit the woodwork…It was the same Cristiano as always."