The 25-year-old played between the sticks in last week's first leg at the Allianz Arena where Los Blancos rescued a 2-2 draw courtesy of an 83rd-minute penalty from Vinicius Junior.
Lunin has featured regularly for Real Madrid this season due to the absence of first-choice shot-stopper Thibaut Courtois, who has been sidelined for much of the campaign with an ACL injury.
The Ukrainian has made 29 appearances in all competitions so far, keeping 12 clean sheets, and has made the fourth-most saves (34) in this season's Champions League across his seven outings in the competition.
Lunin was replaced by Courtois in the starting lineup for Real Madrid's 3-0 win over Cadiz in La Liga last weekend, a victory that clinched the club's 36th top-flight title with four games to spare, but Ancelotti has since confirmed his decision over who will start in goal against Bayern on Wednesday.
Lunin to start ahead of Courtois for Bayern showdown
Speaking at a pre-match press conference on Tuesday, Ancelotti said: "Lunin will play tomorrow. Courtois has to take his time to get back to his best. He played against Cadiz after training very well and had an excellent game transmitting security and confidence, but he has to get back to his best".
Ancelotti's only injury concern is with defender David Alaba who remains sidelined with a knee problem, but the rest of his Real Madrid squad are fit and raring to go as they endeavour to move one step closer to winning a record-extending 15th European Cup.
"We have to try to be at our best," said the Italian. "We're really excited because we've got a great opportunity to make it to the final again, considering the difficulties, which there are a lot of. We're in good shape, highly motivated, and we'll try to do our best. I don't know what will happen tomorrow. Anything can happen, but we are looking forward to another fantastic night.
"It could be another magical night for our fans, but we're not optimistic, just aware of the difficulties we may encounter in the match. We need to play an intense game with good tempo, both in attacking and defensive terms. We could have done a lot more defensively in the first leg. We want an intense match.
"We were happy on Saturday because we won the league, but we had to control our happiness because we had to prepare for this game. We'll put the league aside and (soon) we'll figure out how we're going to celebrate the league title. Of course we're going to celebrate it".
Ancelotti confident of beating Bayern
Asked if he is confident of progressing to the final, Ancelotti added: "I'm confident because we're talking about Real Madrid and we have this squad, which has done very well this season.
"I'm confident in the fans who will get behind us... we're in a good position, but [Thomas] Tuchel will also think that he's in a good position in the tie. We enjoyed preparing for the game today and tomorrow we'll focus on the match".
"Today is a day that is worth savouring and it is a great source of motivation to be in the limelight. There's a lot of worry and fear before the game, but it's amazing today: preparing for a semi-final with the prospect of reaching another final really motivates you.
"[Bayern] have experienced players at Bayern who know this team's character very well, like [Manuel] Neuer, [Thomas] Muller, [Joshua] Kimmich... If it goes to extra time, we'll play extra time".
Bayern handed De Ligt, Musiala injury boost
Meanwhile, Bayern Munich boss Thomas Tuchel has issued a positive injury update on Matthijs de Ligt, confirming that the central defender is fit to feature in Wednesday's second leg after a brief spell on the sidelined.
De Ligt missed the first leg in Munich as well as last weekend's 3-1 Bundesliga defeat at Stuttgart due to a knee problem, but the Dutchman has since taken part in training and is in contention to partner Eric Dier at centre-back.
"At the moment, Eric Dier and Matthijs de Ligt are in the lead. They deserve to continue playing together. Matthijs has given the green light (to play)," Tuchel said at his press conference on Tuesday evening.
Bayern have also been boosted by the news that midfield sensation Jamal Musiala has returned to training this week and is in contention to play against Real Madrid after missing the league defeat to Stuttgart with a minor knee problem.
However, the Bavarians will be without the services of Raphael Guerreiro, who sustained a season-ending ankle injury last time out, and he joins Kingsley Coman (groin), Sacha Boey (hip), Bouna Sarr (ACL) and Tarek Buchmann (hamstring) in the treatment room.
Tuchel: 'Bayern must be clinical to beat Real'
Bayern enter Wednesday's contest having failed to keep a single clean sheet away from home in 2024, while they have have never got the better of their former coach Ancelotti in nine previous attempts; no team has ever experienced a worse winless streak against the same manager in Champions League history.
Despite that, Tuchel remains upbeat and has insisted that his side do not face an "impossible" task on Wednesday, but he has called on his players to be "clinical" in the crucial moments.
"I think it could be a wave-like game with different phases," said Tuchel. "Both teams will also have to endure some suffering at times. Both teams are also extremely strong at keeping the ball. Both teams are very strong in quick transition play. I think it will be a very complex game with different phases. In the phases where you have the momentum, you need luck and to be clinical.
"[The Bernabeu is] one of the most difficult stadiums to win in, but it's not impossible. We had a very good first leg, but unfortunately didn't win. Given they're at home, it's maybe at 51% for Real. They're obviously one of the biggest clubs in the world. We're also a big club in Europe. That's why it's a great match-up.
"We have to protect ourselves very well against Real's counter-attacking play. It will be very important to play as a team. We need a lot of solidarity, we need belief and we have to work for it. Real play a bit more offensively in home games. The starting position is clear, the winner goes to Wembley, and we want to be the winner."
The victors of Wednesday's clash will set up a final showdown with Borussia Dortmund, who beat Paris Saint-Germain 2-0 on aggregate in their semi-final tie - winning both legs by a 1-0 scoreline.