Dennis was initially excluded from the Nigeria team by former manager Gernot Rohr but a change in management saw the former Club Brugge striker included again.
Watford reportedly refused to release Dennis for the tournament because they were not informed about his inclusion on time and the West Africa country have accused the Hornets of threatening the 24-year-old.
"In-form rapid raider Emmanuel Dennis, whose English Premiership club is baring fangs, has been excused to provide room for Czech Republic-based forward Peter Olayinka," Nigeria's official account said on Instagram.
However, Ranieri insists Watford cannot be blamed for Dennis’ no show at Africa’s flagship tournament, which runs from January 9 to February 6 in Cameroon.
Asked whether Watford had disrespected AFCON, Ranieri said: "No. They have a lot of players and they changed the manager.
"We were ready. We know we were ready to give them players, but they didn't do this.
"The two boards spoke and then for me it is okay. I am only the manager, only the coach, and I accept everything. Now I speak with [Dennis], but of course he wanted to go and play. But also he wants to help Watford.
"I accept the decision of the board and the Nigeria team. We respect everybody. I knew they were speaking, the [Watford] board and the Nigeria board. I accept every decision they find. For me, it is finished."
Dennis has scored eight goals and provided five assists in 16 Premier League appearances for Watford this season.
