The Swede celebrated his 34th birthday on October 3 and his contract at the Parc des Princes is due to expire at the end of the season.
But Italian coach Ancelotti, who led Ibrahimovic and PSG to the Ligue 1 title in 2012-13, feels the eccentric striker still has plenty to offer.
"For many attackers it is an age when you are finished, but not for Ibra," Ancelotti said in an interview with Le Parisien.
"He can still play at this level for a few years because he has maintained his enthusiasm.
"And as he trains very seriously and he still wants to win with PSG, he is not on the decline."
The former Real Madrid boss suggested that it was the arrival of Ibrahimovic - from AC Milan for €20m in 2012 - that developed the club into one of the top names on the continent.
"Yes [it was a big club when I left], because we won Ligue 1 and major players joined PSG, especially Ibrahimovic," Ancelotti continued.
"He changed the mentality of PSG, turning it into a club that wins."
And Ancelotti is of the opinion that, under Laurent Blanc, the club are now better placed than ever to lift the Champions League trophy.
"With Blanc, the team continued to do well and challenge in the Champions League," he added.
"Now PSG has become a club that can win the Champions League, one of the best in Europe.
"This is the right year for PSG. There are not many as competitive teams right now. There is Bayern Munich, Barcelona, Real Madrid and PSG.
"These four teams can win the Champions League this season."
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