The former BVB striker feels his former club's Champions League semi-final tie is poised on a knife-edge ahead of Wednesday's first leg
Jurgen Klopp's men host the Spanish giants at Signal Iduna Park this week hoping to earn an advantage before travelling to Madrid for the reverse fixture next week, but Chapuisat has refuted the notion that Jose Mourinho's side are the favourites.
"The first leg will be an incredible match and a great semi-final. It will be 50-50, even if most people see the Spanish as favourites," he told Uefa.com.
"They played each other in the group phase, and they won so they know they can beat Real."
Chapusiat, who won the competition with Dortmund in 1997, has urged the current crop of BVB stars to draw on their recent victory against Mourinho's men for inspiration to aid their passage to the final.
"Mentally, it is very important for the Dortmund players to remember they have beaten Real Madrid and that it is possible," he added.
"They will remember the systems used by Real and they know they can beat them. That is the important thing."