The forward was not involved when the Toffees defeated Sheffield Wednesday in the fourth round of the FA Cup on Sunday.
This season, Iwobi has scoredtwo goals and providing three assists in 19 appearances across all competitions.
Ancelotti revealed the 24-year-old will return against the Foxes while Ivory Coast international Jean-Philippe Gbamin will not be available for the clash as he continues with his recovery.
"We have Digne and Iwobi back, and we have Delph, Allan, Gbamin and Nkounkou out. The others are all good,” Ancelotti said in a press conference.
"We don't have a lot of injuries at this moment because Delph has started to train with us, so practically he is back. We have only Allan, Gbamin and Nkounkou that can recover soon. The squad is all in good condition."
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