The world-record signing was given his first home start since joining Madrid from Tottenham for £85.3million in the summer and took full advantage of the occasion, curling home the opening goal after 13 minutes from just inside the area.
He almost scored a second goal immediately afterwards, forcing a save from Sevilla goalkeeper Beto after turning to shoot following a pass from Karim Benzema.
He eventually got his second of the night on 27 minutes, taking a free-kick which deflected off the arm of Sevilla defender Alberto Moreno and into the opposite corner past a wrong-footed Beto.
The Welshman's work for the night was not done yet, however, and he later provided passes for Karim Benzema and Cristiano Ronaldo to score as Madrid romped to their biggest league win of the season.
Bale had a disappointing night in Madrid's 2-1 defeat to arch-rivals and league leaders Barcelona last weekend and the first two months of his Madrid career have been hampered by muscle problems.
But Ancelotti was in no doubt that his player had redeemed himself on Wednesday night.
"Tonight everyone saw the real Gareth," the Italian told a press conference.
"He played really well, showing fantastic skills. It takes time [to adapt] but it was a necessity. Now he doesn't have problems physically and he is improving his confidence, so he will be very important for us in the future."
The 10-goal thriller also included a hat-trick for Ronaldo, who joined Atletico Madrid's Diego Costa at the top of La Liga's goalscoring charts with 11 goals, and a Benzema double.
Sevilla's Ivan Rakitic also struck twice, the first a penalty, and missed the chance to complete a treble of his own from a second penalty. Carlos Bacca got their other goal.
"It was a bit of a crazy game, we started very well and were 3-0 up," Ancelotti added.
"We then lost a bit of concentration and balance and the game was alive again.
"Offensively we played very well, we scored a lot of goals. We had a lot of good individual performances, especially up front."
The match had an added positive touch for Ancelotti, as former Liverpool midfielder Xabi Alonso came on as a second-half substitute to make his first appearance of the season for Madrid after recovering from a broken metatarsal.
"We need to give him minutes, he was desperate to play and I think he is ready to play from the beginning," said the coach.
"He has done everything he needs to be physically ready and he is a player that doesn't need the physical conditioning of others because he has so many other qualities."