The newly promoted club are les Parisiens' main rivals for the Ligue 1 title this season, but the Italian coach played down his team's chances
Les Rouge et Blanc host the Ligue 1 leaders at the Stade Louis II knowing that defeat will leave them eight points adrift of the defending French champions.
Former Chelsea boss Ranieri conceded that Monaco are underdogs for the game and is more focused on their performance rather than the result.
"We will fight for victory, but it is important to tell the truth. PSG are on another level," the Italian told reporters.
"PSG can win playing at 80 per cent, we must be at 120% to win. This is a great game to play, a good opportunity to gauge our level. The result is almost secondary."
Monaco earned a 1-1 draw in the reverse fixture at Parc des Princes but will be without star striker Radamel Falcao, who scored the equaliser in that game in September, because of a knee ligament injury.
On transfer deadline day, Monaco signed Dimitar Berbatov as a short-term replacement for Falcao and Ranieri confirmed that the Bulgarian will be available for selection for Sunday's clash.
"Berbatov is ready to play," he added. "He will have a role to play on Sunday. He is a great champion."