The German side knocked Madrid out at the semi-final stage of the competition last season and Modric has highlighted the strength of their attack as a cause for concern.
"We know how Dortmund play," UEFA.com quotes him as saying. "They are very dangerous on the counter-attack. We need to be careful when we lose the ball, we will need to get back quickly in defence.
"We must press them well. [As you say], winning 2-0 would be a great result for us tomorrow. We will look to score as many as we can. If we stop their best players from scoring I think that we can achieve a good result."
Modric is in his second season at Madrid, having joined from Tottenham Hotspur in August 2012.