Klopp: Real have improved since last season
The sides met in the semi-finals of Europe's premier club competition last year, with Dortmund winning through 4-3 on aggregate.
Much of their work was done in the first leg thanks to a 4-1 victory at Signal Iduna Park as Robert Lewandowski produced one of his finest Dortmund performances to score all four goals.
Klopp feels Real have added a dimension to their game under Carlo Ancelotti's guidance but still believes in his side's ability to cause problems.
"Real Madrid have become more flexible this year and are better this year," he said.
"I've watched a lot of Real Madrid games over the years. I can't remember a single one where they didn't create chances.
"Real shouldn't give us any space. If they do, we can hurt them."
Lewandowski is suspended for Wednesday's fixture in the Bernabeu but Dortmund have the likes of Pierre-Emerick Aubameyang and Marco Reus to threaten Real's backline in the Pole's absence.
The Germany international claims Dortmund have a plan to ask questions of Real without Lewandowski.
"We have a positive attitude," he added.
"(Lewandowski) is very important for us. Our coach has been thinking about it and I think we can substitute him well.
"We played very well against Stuttgart last Saturday but this is a different match. Real Madrid are very strong individually but we also know their weaknesses. We must be ready to take advantage of them in the right moment."