The two Merseyside clubs will meet at Wembley Stadium on Saturday lunchtime for a place in May's final.
Downing believes that the Reds can beat their local rivals if they show the form that has seen them win two derbies already this season.
"I don't really get nervous. It's more excitement," the winger told the club's official website. "Because it's Everton there's extra pressure but I'm really confident we can beat them.
"I think we have got the better squad - we just have to prove it. We've already proved it twice - hopefully we can do it again."
Downing moved to Anfield from Aston Villa over the summer for around £20m.