The Reds take on Pep Guardiola's side in a huge top-of-the-table clash at Anfield, with the Reds holding a six-point lead over City after eleven games.
Klopp's side could further strengthen their position with a win this weekend, however, City will be well motivated to reduce the gap to three points and increase the pressure on Liverpool.
The Reds boss insisted his side must be brave and create chances, saying "if you are not brave against Man City you have no chance."
“[The rivalry] is getting bigger and bigger,” he told reporters.
“Man City is a pretty good football team and that means there is a rivalry. Thank god there is a rivalry as that means we are not in a bad place.
“In the last nearly two-years it feels like each game we play is the most decisive of the season, there’s’ not one where anybody said, ‘you can lose that.’
“First, we were fighting for qualifying for the Champions League then trying to win the title, trying to go to the final again and the year before we try to go to the final and fight for the Champions League.
“You cannot make games bigger than they are already so it’s a very very important game, but we cannot make it more important than very very important.
“It’s a big game. Two really good teams face each other. Best news it’s at Anfield which is really cool under the floodlights, so everything is prepared for a good football game.
“Everything is on the plate. Nobody hides anything. We both try to deny the strength of the other, which we have to do, you cannot only be offensive but if you are not brave against Man City you have no chance, not even for a point.
“We have to create. Positioning must be nearly perfect, protection must be perfect, movement, different ideas – there’s a lot in a game like this and it’s possible that it will be 0-0 like last year.”
The manager also urged all those at Anfield to be in "absolutely top shape" as he issued a rallying call to supporters attending the game.
“On Sunday, we have to play our best game,” he said.
“Everybody in the stadium has to be in absolutely top shape. The guys who sell hot dogs have to be in top shape.
“Everybody has to be [up for it] from the first second, come early, go inside, nothing outside, wait for the warmup, be there, all that stuff.
“That’s what I wish for, that before we know if we get something for it, that we already invest all of our emotions before the game. Then let’s play football.”