The Royals are rooted to the foot of the Premier League table, but the manager is hoping for a good showing and has demanded his players show a more ruthless side to their game against the champions.
"If you look at their record, they've lost only once in a huge number of games - and that was against Manchester United," McDermott told the club's official website.
"They've got quality - they've spent absolute fortunes and they've got quality all over the pitch. They're a top side and won the Barclays Premier League in the last minute in what was the most amazing day of football anyone has ever witnessed.
"We know what we're going into. We've played them before in the quarter-final of the FA Cup and we got beat late in the game. I thought we were going to bring them back to the Madejski that day.
"We're looking forward to going there. We know what we're coming up against but anything is possible in football. We're going to the Champions and I'm looking forward to the occasion. I want our players to perform to the best of their ability and give ourselves every opportunity.
"We just need to go there, perform, and do our stuff. We have to be more ruthless with each other and the opposition, especially when we go in front."
|A ROYAL SURPRISE|
|18/1||Reading are 18/1 with Bet365 to beat Manchester City by any score on Saturday|
McDermott insisted he was happy with the effort put in by his players in recent matches, despite losing on each of their last six outings.
He explained: "I looked at the stats from Monday [against Arsenal] and I was asked after the game about the commitment of the players - but actually our work rate in the game was massively high.
"It wasn't about players not giving it their all for the cause - the commitment and work-rate of the players was there, there's no doubt about it.
"We are where we are - it's not an even playing field between the two. But you have to do what you have to do with the squad and players that you've got. We're trying to find a way to get results and compete.
"We play for our fans and we really want to give them something to cheer about - that's the most important thing."