The France striker was forced off early during the match against Elche last month.
“He’s ruled out, he’s been training for several days but he’s not feeling well enough, we still have to wait two or three days. He’ll be there for the next match (against Villarreal),” Ancelotti told a news conference.
Real missed Benzema when they suffered a disappointing 1-0 loss at Athletic Bilbao in the Copa del Rey quarter-finals on Thursday.
“He is the top scorer in LaLiga, scored many goals this season… Any team, if they had Benzema and he was missing, would notice his absence,” Ancelotti said.
“But we have also won games without him before, like against Inter Milan, Real Sociedad or Elche. He can be replaced.”
Belgian forward Eden Hazard also missed the Bilbao defeat.
“Nothing has happened on a personal level, not physically, he is training and he’s fine. But I have to make decisions looking for the best team. If he doesn’t play it’s because I prefer another player,” Ancelotti said.
Ancelotti faces a selection headache on Sunday as Vinicius Jr. is suspended.
The league leaders host Granada as the league returns after a two-week break due to the rescheduled South American World Cup qualifiers postponed from last year due to the COVID-19 pandemic.
Real Madrid lead the standings on 50 points from 22 games, four points ahead of second placed Sevilla.