The England international, 27, is still working his way back to full match fitness after a cruciate knee ligament problem, but Ancelotti has pencilled him in for a tactical switch.
The Italian boss said: "The best position for Joe is to play behind the forwards as an offensive midfielder.
"He has the quality to play there because he is very good at dribbling and passing. But he can also play in left or right midfield because he's a dynamic player."
Defender Alex and striker Salomon Kalou have recently agreed new deals at Stamford Bridge.