The Sky Blues have been drawn in Group A alongside RB Leipzig, PSG and Club Brugge, as Pep Guardiola's side look to go one step further after losing to Chelsea in last season's Champions League final in May.
City, who will be embarking on an eleventh-straight campaign in the elite European tournament, will kick off proceedings at home against German outfit RB Leipzig on Wednesday 15th September.
Speaking after City's 5-0 victory over Arsenal in the Premier League at the Etihad Stadium on Saturday afternoon, İlkay Gündoğan delivered his verdict on this season's group-stage and what City are hoping to achieve in Europe's elite club competition this term.
"I'm happy (with the draw). At the end of the day, you play Champions League (football) to compete with the best teams in the world," said the Germany international in his post-match interview.
"I think we have a tough, challenging group. But obviously, our opponents will think the same. So, we need to be ready and I have no doubts that we are going to be ready and I have no doubt that we are going to be ready."
After failing to get past the quarter-final stage in four attempts under Guardiola, City reached their first semi-final under the former Barcelona manager last season, as they beat Borussia Dortmund in the quarter-final by an aggregate score of 4-2.
City went on to book a place in the Champions League final for the first time in the club's history with a historic semi-final win over PSG last season, as Riyad Mahrez netted thrice over two legs to set up a meeting with Chelsea in Porto.
Gündoğan added: "The target is easy for the Champions League this season - it is to do better than last season, so we'll try it. We'll try to go for it again, even though we know it's going to be very difficult. Very tough. But, everything is possible."
Full details of City's Champions League group-stage fixtures can be found below:
Wednesday 15th September: RB Leipzig [H] - 20:00 BST
Tuesday 28th September: PSG [A] - 20:00 BST
Tuesday 19th October: Club Brügge [A] - 17:45 BST
Wednesday 3rd November: Club Brügge [H] - 20:00 GMT
Wednesday 24th November: PSG [H] - 20:00 GMT
Tuesday 7th December: RB Leipzig [A] - 17:45 GMT
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