The Eagles have been impressive on the road under the tenure of Alan Pardew, recording nine victories in their 12 matches, including three wins away from Selhurst Park this season.
Ranieri believes that the Foxes will have to be at their best throughout the contest to maintain their strong start to the campaign.
He told the club's official website: "Everybody was convinced that anything was possible. This season, against us it's difficult for all the teams. They can beat us but also we can beat them.
"It is a very tough match. The last 12 matches away with Alan Pardew, it's been nine victories. That is amazing. We are ready. We know they are very dangerous. I think the fans will watch a good match.
"I work every day on defending. I know I'm an Italian manager and when we concede a goal something cuts inside our heart but when we draw or win it's okay, I close one eye."
Leicester are fifth in the Premier League ahead of their clash against Palace.