Premier League champions City start their UEFA Champions League campaign at Bundesliga counterparts Bayern Munich on Wednesday, with the teams meeting in the group stage for the third time in four seasons.
While City have excelled on the domestic scene in recent years, that success has yet to be replicated in European club football's elite competition - their best showing in three previous attempts coming in last season's last 16 defeat to Barcelona.
Kompany has now issued a rallying cry for City to prove they can mix with the best the competition has to offer.
"It is a pleasure to come here [Munich]," said the City captain. "It is always a chance to prove ourselves.
"There is probably not many harder places to come to. It is one of the best clubs in the world. It is the time to close the gap between us and those three, four best clubs in the world.
"It's time to start making these games close, making up the gap between ourselves and others.
"It is a good thing to start with such a game. But it is just the first step in the group stage. It is an important game."
It was put to Kompany that City's target for this season is to reach the last four, but the Belgium international only has eyes for the big prize.
"There is only one winner - the rest are losers," he added. "It's difficult to predict what will happen [against Bayern], but as we move on we will get stronger.
"We are not favourites, but the beauty of this game is that every year is a chance to start again. We've seen how much damage it can do when you don't finish top of the group. We believe in our abilities."
