PSG gave up a 4-0 lead from the first leg to lose 6-5 on aggregate and exit the competition in the round of 16 against Barcelona last term.
They have been drawn against holders Madrid at the same stage and face two demanding encounters with Zinedine Zidane's Liga powerhouse in February and March.
And Djorkaeff, who played for PSG in the 1995-96 season, feels his old club could not have been pitted against a tougher opponent.
"Honestly, Real Madrid is the only team I feared before the draw," he told Le Parisien.
"The Paris squad is indeed superior in quality and quantity to the vast majority of teams... in the round of 16.
"But Real, it's really difficult. [Madrid] have won three of the last four Champions Leagues, that says a lot.
"But we must also see the good side of things. These two confrontations between Real Madrid and PSG will be watched around the world.
"And if Paris passes this round, I feel that they will go to the end this year. Because it will give confidence to a whole club.
"To the players of course, but to all the environment of the PSG, the relatives of the players, the media, etc.
"This can create incredible momentum and dynamics. Conversely, in case of elimination, the end of the season may be very long ... It would be terrible."
PSG lost 3-1 away to a resurgent Bayern Munich on the final matchday of the group stages, a result Djorkaeff feels should reinforce the need for total concentration on the biggest stage in European club football.
"It reminds everyone to stay focused with this PSG team," he said.
"Yes, it has incredible potential, but it's still not the best team in the world. Bayern's first 45 minutes showed Parisians what the highest level in Europe is.
"The lesson is this: in the Champions League, you can be second best for 10 minutes, but not for a whole half. It is not possible, otherwise you are punished."