Alonso was booked in the first half of Real's 4-0 semi-final second leg win over Bayern Munich for a clumsy foul on Bastian Schweinsteiger.
The yellow card was the Spain international's third of the tournament, ruling him out of the final against city rivals Atletico Madrid in Lisbon on May 24.
Madrid were already 3-0 ahead – and 4-0 up on aggregate – when Alonso committed his foul, and he later claimed missing the final was a "shame" and that being banned for the final due to an accumulation of yellow cards was an "unfair rule".
He could still feature in the showpiece though, after Ancelotti told reporters on Saturday that they would appeal against the decision.
"Xabi Alonso's natural replacement is (Asier) Illarramendi (if required)," Ancelotti said.
"But we will appeal the yellow card."
Sami Khedira was tipped to replace Alonso by some, with the Germany international returning to training last month for the first time since injuring his knee in a November friendly against Italy.
And Ancelotti said he will play a part in his matchday squad for Sunday's home clash against Valencia.
"Khedira is available for tomorrow. He will start on the bench," he added.
"Khedira will come back slowly (though). We will organise a friendly in Valdebebas next week to help him improve."
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