The Liga giants overcame the reigning European champions 4-0 at the Allianz Arena on Tuesday to wrap up a 5-0 aggregate success and book their place in the UEFA Champions League final.
A flying start saw Real towards a place in the Lisbon showpiece, with Sergio Ramos netting twice and Cristiano Ronaldo adding a third before half-time.
There was to be no way back for Bayern, as Ronaldo struck again late on, and Ancelotti feels his side put in an almost faultless display.
He told Sky Sports: "Unbelievable. It was a fantastic performance. I'm really happy.
"I think the first half was fantastic, we did really well defensively and offensively, with the ball and without the ball. It was the perfect game, I think, first half.
"We tried to do a little bit more of what we did in the first game against Bayern Munich, to put more pressure in front and play quickly. Everything was good."
There is a chance that Ancelotti could now come up against former employers Chelsea for the right to be crowned continental kings, with ex-Real boss Jose Mourinho lining the Blues up against Atletico Madrid on Wednesday - in a tie locked at 0-0 from the first leg.
Asked who he would prefer to face in the final, Ancelotti said: "I don't know. Chelsea has a lot of experience in this type of game. On the other side, Atletico is a team with a lot of enthusiasm at this moment.
"It doesn't matter, it's just important to be in Lisbon."
Few can deny that Real deserve their shot at a 10th European triumph, and Luka Modric feels they showed against Bayern that they are capable of going all the way.
The Croatian playmaker said: "It was an excellent performance from the start.
"When you look at both games, the first one and today, we absolutely deserved to go to the final.
"We played really good football at home and today and we scored great goals. We could have scored more, but we are really happy with this result and with our performance. We were at the top level.
"We knew what to expect from Bayern - they like to keep the ball, they like to pass the ball. But they didn't create many chances from their possession.
"They defend well when they have the ball and when we got the ball, we had great counter-attacks. Tonight we scored from two set-pieces and then after Cristiano. Overall, we performed at the top level and we deserve to be in the final."