The Premier League champions have been drawn against Real Madrid, Ajax and Borussia Dortmund in Group D, and the Belgian centre-back is relishing the challenge.
"I thought it couldn't get much more difficult than last season but here you go," Sky Sports News quotes Kompany as saying. "It is a great challenge. I do think we are the kind of team that gets better as the challenges are greater.
"That is perfect for us. There won't be any moments where we will be surprised. The motivation will always be sky-high. The atmosphere will be great in each of the six games we have in the group.
"I couldn't think of a better way to play the Champions League. I know it is all about how far you get in the competition but I still like to think it is even nicer when you play the best teams."
City will begin the group stage of the Champions League with an away clash against Madrid on September 18.