The Toffees raised hopes of a shock result when Richarlison cancelled out Phil Foden’s opener, but further goals from Riyad Mahrez and Bernardo Silva in the second half sent City 10 points clear at the top of the table and made it five home games without a win for Everton.
Ancelotti once again shuffled his pack, making four changes from the defeat against Fulham.
Jordan Pickford, Yerry Mina, Michael Keane and Alex Iwobi came in, with Robin Olsen, Seamus Coleman, James Rodriguez and Andre Gomes dropping out.
There was no place in the squad for Allan despite the Brazilian being among the subs on Sunday. The Toffees reportedly didn’t want to take any risks with the midfielder ahead of the derby this weekend.
Tactically it looked like a return to the four centre-backs in a 4-4-2, with Lucas Digne pushed forward.
City, unsurprisingly, had the first opportunity, though it came from an unlikely source. Full-back Joao Cancelo firing in a shot from distance that was pushed away by Pickford inside two minutes.
Everton did manage to launch a lovely early counter-attack as Digne’s teasing cross found the onrushing Abdoulaye Doucoure, but the midfielder opted to try and cross for Richarlison when a first-time shot may have been the better option.
With the derby coming up this weekend it was inevitable that Everton would pick up and injury, so so they did after 15 minutes. Yerry Mina picked up a calf problem and had to be replaced by Seamus Coleman.
Everton’s defence actually held up well, showing great discipline and holding City at arm’s length for the first half an hour.
Unfortunately they were left to rue their misfortune a few minutes later.
A cross from the right was only cleared as far as Foden, whose right-footed shot took a wicked deflection off Coleman and completely wrong-footed Pickford.
You feared the worst at that stage. But, remarkably, Everton equalised just six minutes later.
Coleman’s teasing cross from the right of the area was met by Digne, whose shot hit the post before hitting Richarlison and going in.
It was the first goal Manchester City have conceded from open play since December 15.
Pickford was soon in action at the start of the second half, parrying away a low drive by Bernardo Silva from just inside the area.
Another Toffees counter then created a half chance for Gylfi Sigurdsson, whose shot on the turn was blocked by Ruben Dias and looped into the arms of Ederson.
Gabriel Jesus, who has scored more goals against Everton than any other Premier League opponent, should have put City ahead again but he fired over when played into space inside the area. Rodri then flashed a header wide from Bernardo’s corner.
City were knocking on the door, and they burst right through it with a moment of inspiration on 63 minutes.
A simple lay-off from Bernardo teed up Mahrez on the edge if the box, and the Algerian bent a wonderful effort beyond the sprawling Pickford and in off the far post.
Ancelotti responded by making a double change, with Josh King and James Rodriguez coming on for Iwobi and Tom Davies.
The changes had minimal affect and with 13 minutes left it was game over.
A lovely move involving Jesus and Mahrez set up Bernardo, whose powerful drive from just outside the area was too strong for Pickford.
As if to demonstrate their utter dominance, City threw on Kevin De Bruyne, who was fit again after seven games out with a hamstring injury.
It was almost unfair.
Mahrez shot wide late on when he perhaps could have done better. You always felt they had another gear.
There is no shame in losing to City, they look streets ahead of everyone else and it wouldn’t surprise me if they win the quadruple this season.
But this defeat compounds Sunday’s disappointing defeat to Fulham, with Everton’s European hopes fading fast. They also look weary after a breathless run of eight games in 25 days.
There’s no time to rest, however. It’s Anfield next...