The two nations will go head-to-head in Porto Alegre on Monday, after the north African nation were a surprise qualifier for the knockout stages having finished second behind Belgium in Group H.
Lahm said he is preparing to face a physical test from Vahid Halilhodzic's men, and that Germany must fight fire with fire.
"The team (Algeria) will make life hard for us, it does not want to allow a goal, doesn't want to lose any tackles, who will foul instead of risking anything," the Bayern Munich stalwart said.
"An unpleasant opponent.
"But we have to concentrate on ourselves.
"We need to perform well, play our game, which means to be aggressive and show our playing ability."
Lahm said it was important not only that Germany advanced but did so inside 90 minutes.
"We are in the round of last 16, it's go through or go home. It's clear that we don't want to have these kind of problems, we don't want to go to extra time or to penalties," Lahm said.
"We want to do our job in 90 minutes. But we know it's not going to be an easy task for us.
"We maybe play against a smaller football nation but we know what they can do, we saw it for three games in the group stages."
Lahm failed to name who he thought were Algeria's threats - he claimed not to know how to pronounce their names - but insisted Joachim Low's men were well prepared.
"We're prepared for our opponent, we made some video analysis," he said.
"We know what there is coming, a team which will fight for its life.
"A team which want to show that they deserve to be in the round of last 16."
