Ancelotti has denied holding talks with Liverpool to replace Brendan Rodgers in October, though the former Chelsea manager would like to return to the Premier League.
But the 56-year-old Italian – on a break after he was sacked by Real Madrid at the end of the 2014-15 season – said he did not speak with the Merseyside club.
"I would like to come back to work in England," Ancelotti told the Daily Mail.
"I love the football here, I still have a house in London, and I would like to be with a team that is competitive in England and in Europe.
"I think Liverpool are a good team. They have some really good young players – (Philippe) Coutinho, (Roberto) Firmino, (Christian) Benteke. If they can find an experienced player like (Steven) Gerrard or (Jamie) Carragher – an example to the squad – I think they can be really competitive.
"But I did not speak with them. If I spoke with them I can say "yes", but no, I did not."
When asked if his advisers had spoken with Liverpool, Ancelotti added: "No. They made the right appointment in Klopp.
"He is a good manager. With the best managers you see their identity in their team. Klopp's (Borussia) Dortmund team had a very strong identity."
