First place in Group A is on the line at the Santiago Bernabeu with both sides having taken seven points from their opening three games after a 0-0 draw when they clashed in Paris two weeks ago.
“After a 0-0 draw at our home Real have a psychological edge,” admitted Blanc.
“We are coming here to Madrid and, without lacking any respect to a great club, we want to impose our play here.
“It is ambitious I know, but I hope that we can win both the physical and technical battles because it will take both to win.”
The French champions were criticised for not making more of a drastically depleted Madrid side due to injuries at the Parc des Princes.
Blanc admitted he was surprised at the Spanish giants' attacking intent having labelled Rafael Benitez’s men defensively minded in the build-up to the first meeting between the two.
And the former Barcelona defender believes his side must be better physically and technically to inflict Madrid’s first defeat since Benitez took charge in June
“It is just in terms of intensity and precision we didn’t have the means to be better.
“These two criteria of technical skill and physical strength is what it will take to make this match a reference for us.”
Despite three consecutive French titles, including a domestic quadruple last season, PSG have yet to truly make an impact on the Champions League in recent seasons.
Victory at the Bernabeu would arguably be the biggest win since Qatar Sports Investments starting investing millions in the club in 2012.
However, Blanc played down the importance of making a mark in the group stages after their experience of being thrashed 5-1 on aggregate by eventual champions Barcelona in the quarter-finals last season despite a 3-2 win over the Catalans in the Group Stage.
“It is a prestigious match, but a victory at Real Madrid doesn’t give us any guarantee of being in the quarter or semi-finals in the spring.
“Last year we beat Barcelona at home in the group stage, but they eliminated us in the quarter-finals.”