Ancelotti says calendar going 'over the limit' and Real didn't need to spend in January
Los Blancos play in the Club World Cup in Morocco later in February and remain in contention for the Champions League, Copa del Rey and Spanish league title.
Madrid lost the Spanish Super Cup final against Barcelona in January, with the competition taking place in Saudi Arabia.
"We won't throw away a competition, because this club does not throw away competitions," Ancelotti told a news conference.
"(But) resting players now is important because the calendar is incredible.
"La Liga wants to do their thing, the federation (Spanish FA) wants to do their thing, FIFA wants to do their thing, UEFA wants to do their thing."
The coach said his players did not have any time to rest and something had to be done about the excessive amount of football played by elite sides.
"It's a very serious topic," continued the coach.
"We are excited to play and the players like it, but there's a limit for everything and I think that right now, with this calendar, we're going over it.
"All together we have to do something to change this."
Good planning means no need for January spending
Ancelotti also said that Real Madrid are in good shape so did not need to spend big in the January transfer window, unlike clubs in the Premier League.
Premier League teams spent a record 815 million pounds ($1.00 billion) in the January transfer window, an analysis from Deloitte's Sports Business Group said, with more than 275 million pounds spent on Tuesday's deadline day alone.
Real, second in LaLiga, did not make any signings in the winter window but nor did they sell any of their players as they make a push to retain the league and Champions League titles they won last season along with other silverware.
"We did not address the (January) market because we did not need to," Ancelotti told a news conference ahead of Thursday's LaLiga match against Valencia.
"If you do your planning well, you do not need to go the market (in January).
"If you have to address the market, it means that something went wrong. We thought that we didn't need to... because we see our squad in good shape."
Ancelotti's former club Chelsea were the biggest spenders in the Premier League, including paying an English record 107 million pounds on deadline day for Benfica and Argentina midfielder Enzo Fernandez (22).
"We all know what happens there (in the Premier League) with the money from the television rights that are much higher than everywhere else," the Italian added.
"And it is not going to change, it will stay this way... gives them advantages. Yet, they will still be challenged by (other leagues) in Europe."