"Benzema is ready to play tomorrow (against Athletic Bilbao in the final league game of the season), he has recovered very well, he has a year on his contract, so we have no doubts here," Ancelotti told a news conference.
"The club's legends have to retire at Real Madrid. I think that's what all the fans and the club think, but then there's the thinking of the player."
Reports emerged during the week about Benzema being set to move to a Saudi club, but the player himself dismissed them on Thursday when speaking at an awards ceremony.
"Why am I going to talk about the future, if I'm in Madrid? What talks is the internet and reality is not the internet," Benzema said.
However Ancelotti said there will be some departures and arrivals at the Santiago Bernabeu this summer.
"It's going to be a squad with some different players, but it's going to be competitive," he said.
The Italian coach would not go any further, beyond confirming the arrival of Rayo Vallecano defender Fran Garcia, as reported months previously.
Ancelotti avoided talking about Madrid's alleged interest in England and Tottenham striker Harry Kane.
"I'm not going to talk about the future of the squad that is in place," said Ancelotti.
"Kane is a great player, he is a Tottenham player, we have to respect the player and Tottenham."
