Real Madrid were stunned by Schalke 04 in the return leg of their Round 16 tie as the Spaniards lost 4-3 at Santiago Bernabeu. Fans became frustrated as Real narrowly escaped elimination in the opening knockout stages. They booed their team and also waved white handkerchiefs symbolising surrender.
Real Madrid boss Ancelotti accepted that his side were the deserved losers.
"I'm very sorry. We played very badly and that is bad for our image," said Ancelotti.
"We're professionals, we don't make ourselves look ridiculous."
The Italian also accepted that fans were right to boo them as his side badly underperformed. He singled out defense for their miserable performance.
"All the criticism we get is justified," Ancelotti said. "We need to look at our defence, that's where all our errors were. No team has put four past us at home.
"We had problems in every aspect of the game: offensive; defensive; desire; fight and concentration.
"It's not easy to explain what's happened. We've lost confidence. It is quite incomprehensible after what we did until December," said Ancelotti, whose players including Gareth Bale appeared dejected at the final whistle.