The European champions sold the Spain international for 22 million euros in July and can exercise a buy-back option at the end of the season for Morata to return to the Bernabeu stadium for a set fee of 30 million euros.
The Spanish media reported that Real are keen for Morata to come back, with the 22-year-old forward having impressed in his first season in Turin.
However, Ancelotti told Gazzetta dello Sport: "Morata needed to play.
"He's a young player who was looking for more opportunities and consistency. He had a lot of offers and he is the one who chose Juve.
"Morata is a modern striker, who has pace, rhythm and intensity. He is cool in front of goal and is a hard worker.
"In Morata's contract, Real hold an option to buy back the player but I think he will stay at Juventus."
Morata has scored six goals and provided four assists in 16 league appearances for the Serie A leaders.
Moreover, he scored his second Champions League goal for Juve in Tuesday's 2-1 home triumph over Borussia Dortmund in the first leg of their last 16 tie.
Morata has plenty to look forward to with Juve alive in three competitions.
The Bianconeri are nine points clear of Roma at the top of Serie A and host Fiorentina next week in the first-leg semi-final of the Coppa Italia.
Juve travel to Dortmund next month looking to progress to the last eight of the Champions League.
