Pep Guardiola’s side sit top of the Premier League table after six matches, scoring 21 goals, including 16 in their last three games.
Last season saw them struggle against their immediate rivals, including home and away defeats to eventual champions Chelsea.
But City have found an extra gear this term and Gundogan says the squad are in great shape ahead of Saturday’s game at Stamford Bridge.
“It’s a big game against the champions,” he said.
“It’s about mentality, it’s about proving ourselves and everyone else that we are able to play the game we played over the last weeks against a top team.
“At the moment, we feel ready. We feel good. We are in shape and we are in form.
“We are just waiting for Saturday and we can’t wait to play again.”
Gundogan recently returned from a nine-month injury layoff to start against West Brom in the Carabao Cup, a game that immediately saw him back to his silky best.
But a bad challenge by Claudio Yacob saw him taken off amid fears he was set for another lengthy period on the sidelines.
Fortunately, the injury wasn’t serious and he was able to play again a week later as a second-half substitute against Shakhtar Donetsk in the Champions League.
He was afforded a fine reception by the home supporters, something the German hugely appreciates.
“Obviously, I was really happy about the reaction from the City fans,” he said.
“It was my first home game after my return, so it was great to run back on that pitch.
“I am very pleased. I have worked hard over the last months for this moment and to get that support from the crowd was amazing. I really enjoyed the minutes I got.”
Gundogan looked assured and confident during his cameo against Shakhtar, just as he had done against West Brom, where he was City’s best player for the hour he was on the pitch.
His passing quality was immediately evident at the Hawthorns, and the West Brom players struggled to get near him.
Gundogan says his ability to return from injury and quickly find form is something that has often surprised people.
“I worked hard and there are people telling me that, surprisingly, I always have the ability after long-term injuries to come back and play my first game like I was not really out for such a long time,” he said.
“People keep telling me that. I felt like that also, you know? I just enjoyed the game, I felt good, I didn’t feel tired, I had no pain. I just enjoyed playing passes and to be out there with the lads.
“Unfortunately, after that tackle I had to leave the pitch, but fortunately it was nothing huge so I could play again against Shakhtar. That shows me that I’m strong, I feel good and of course I want to improve over the next weeks.”
With City’s focus very much on attack, the goals have been flowing. In their nine games in all competitions this season, they have managed a remarkable 29 goals.
Watching from the sidleines for much of the season, Gundogan has seen a side he knows is set up perfectly for a player like him to excel.
“Yeah, definitely. It makes things easier for me as well,” he said.
“To come into the team with all these guys is fun, to perform with them.
“It makes it much easier for me, I just enjoy every single minute, and of course hoping for more minutes now.”
