Speaking to reporters at the Emirates on Wednesday, the Italian veteran praised his opponents resurgence under new coach Unai Emery.
"New players have arrived and this is a new era. Arsenal are still competitive in the Premier League and in Europe," Ancelotti remarked.
Once rumoured as a potential replacement for long-serving manager Arsene Wenger, he dismissed talk as speculation.
"I was not involved in the new era of Arsenal without Arsene. I sometimes talk with him but not about his replacement. We talk French wine."
For his part, Emery was quick to praise his opposite.
"I have respect for every coach and I think Ancelotti is top," he said. "He has experience in all countries and his career as a coach is amazing."
The first leg will be played at the Emirates on Thursday at 19:00 GMT.
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