The retired defender believes that Jurgen Klopp's side can capitalise on Bayern Munich's expectations, using the Reds' Champions League final in Istanbul as their inspiration
The former Liverpool defender helped his side claw their way back from a 3-0 half-time deficit against Milan eight years ago to lift the trophy after winning a penalty shoot-out, and Carragher believes that the underdogs could also be crowned European Champions on Saturday evening.
He wrote in his Daily Mail column: "This could be one of the closest finals we have seen in recent years and Dortmund are not the 7-2 shots that bookmakers suggest. If anything, Bayern will be the more apprehensive of the two sides. They, after all, have everything to lose. Dortmund have it all to gain.
"Dortmund are in a similar position to the one we experienced with Liverpool on this day exactly eight years ago. Nobody gave us a chance of beating AC Milan in Istanbul, so that meant we could enjoy the occasion. Winning the biggest trophy in club football went beyond our wildest dreams.
"Bayern, in contrast, will in some ways be dreading this match as the pressure on them is immense.
"Bayern Munich are THE club in Germany and to lose the prize they crave most to a team from their own country would be a savage blow to their esteem."