The Portugal international was sanctioned after being dismissed for violent conduct in the 1-1 draw at Athletic Bilbao on Feb. 2 and has not played since he netted two penalties against Atletico Madrid in the King's Cup on Feb. 11.
Real are the leading scorers in Europe's elite club competition with 20 goals, Ronaldo scoring a group-stage record nine, and Ancelotti said he would be back in the starting lineup for the match in Gelsenkirchen in a three-pronged forward line with Wales winger Gareth Bale and France striker Karim Benzema.
"He (Ronaldo) is motivated because he really wants to play," Ancelotti told a news conference.
"He was not happy about being sidelined," added the Italian, who is attempting to lead Real to a 10th European title in his first season in charge.
"He has prepared well during this period and his physical and psychological condition are optimal."
Real have been in fine form in recent weeks and took over at the top of La Liga at the weekend after champions Barcelona and Atletico suffered surprise defeats.
However, they have a surprisingly poor record playing away against German opposition, winning just once in 25 visits and losing 18.
Wednesday's game is their first meeting with Schalke, who have former Real striker Klaas-Jan Huntelaar in their ranks.
"It is going to be a very intense game," Ancelotti said.
"The other team is going to try everything to win and they have a lot of quality and are well organised. To win here we will have to be at our best."