United manager David Moyes is thought to be keen to bolster his midfield options ahead of the new season, but having previously missed out on Thiago Alcantara and with a bid for Barcelona's Cesc Fabregas looking to have stalled the Scot has reportedly now turned his attentions to Modric.
The Croatian playmaker has also been linked with a return to Tottenham as part of Gareth Bale's prospective world record move to Real Madrid.
However, Ancelotti is adamant that Modric will not be leaving the Bernabeu during the current transfer window.
"It is not true that Luka will leave. All the players are very happy to be here and working well," said Ancelotti.
"We have not spoken about any player leaving, it’s not true Modric will leave."
Modric scored four goals in 53 appearances for Real last season and featured in the 3-1 pre-season win over LA Galaxy on Friday.
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