The BVB captain believes Los Blancos are one of the favorites to win the tournament this season but stressed his side are in great condition ahead of the first leg.
Sebastian Kehl accepts Borussia Dortmund will be underdogs against Real Madrid, despite beating the club in the Champions League last season.
Dortmund overcame Real 4-3 on aggregate to secure a place in the 2012-13 final, with a 4-1 first-leg triumph at Signal Iduna Park arguably the highlight of a marvelous European campaign for Jurgen Klopp's men before their final defeat to Bayern.
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The Bundesliga giants are in contention to make another run toward the latter stages of the competition this year and will renew acquaintances with Real in the quarterfinal first leg at the Bernabeu on Tuesday.
The Spanish side crushed Dortmund's neighbors, Schalke, 9-2 on aggregate in the last 16, and Dortmund heads into the game without striker Robert Lewandowski - scorer of all four goals in last term's first leg success against Real.
Kehl knows that Real will present a different proposition this time around.
"We're in excellent condition physically, but of course we know that Real are not the same side we faced last year," Kehl told Kicker. "They are the absolute favorites, together with Bayern Munich, to win the Champions League. But we showed last year that we can beat them and they won't have forgotten that."
Dortmund can at best achieve a second-placed finish in Germany's top flight but can reach the final of the DFB-Pokal by overcoming Wolfsburg in the last four in mid-April.
Kehl insists that meeting those targets takes precedence over Dortmund's exploits in the Champions League.
"Then we would have reached all of our goals [by finish second and reaching the DFB-Pokal final]," Kehl said. "We have already gone as far as we planned in the Champions League, and all that comes next is a bonus."