Sanches had been expected to leave the German champions on loan, having only started six league matches in his first season at the Allianz Arena after joining Bayern in a €35million deal.
AC Milan were reportedly front-runners to sign the Portugal international on a temporary basis, although chief executive Karl-Heinz Rummenigge confirmed Chelsea's Antonio Conte had asked about the teenager's availability.
But Ancelotti, having been impressed with the displays put in by Sanches during Bayern's International Champions Cup campaign, says he will now keep the midfielder.
"On Renato, there’s no news," the Italian said at a press conference for the Audi Cup, a pre-season tournament hosted by Bayern on Tuesday and Wednesday.
"He's started the season with us and he’ll stay with us until the end of the transfer window, on August 31. He played well in our last game."