(CNN) -- Real Madrid, the kings of Europe, will take on a team living one of the greatest fairytale stories in Bulgarian football history.
Ludogorets Razgrad, which clinched its place in the group stage of the Champions League for the first time following a dramatic penalty shootout playoff victory, will travel to the Santiago Bernabeu stadium to face the defending champion.
Real, which defeated city rival Atletico 4-1 in Lisbon last year to win "La Decima" -- it's 10th title -- is attempting to become the first team to successfully defend the Champions League.
Ludogorets will also face five-time champion Liverpool -- back in the Champions League after a five-year absence -- as well as Swiss side FC Basel in Group A.
Ludogorets defeated Romanian side Steaua Bucharest thanks to two penalty saves from stand-in goalkeeper Cosmin Moţi.
Moţi , a defender, went in goal for the shootout after goalkeeper Vladislav Stoyanov was sent off with one minute of extra time remaining and made himself a hero.
Surprisingly Liverpool have won all three of their European Cup matches against 10-time champion Real and have never even conceded a goal against them.
Elsewhere, Bayern Munich will face Manchester City in a repeat of last season's group stage contests.
Munich produced a fine performance to win 3-1 in Manchester but was stunned by the English club at the Allianz Arena, losing 3-2 in the return fixture.
"We're coming up against familiar teams here," Bayern keeper Manuel Neuer told his club's website. "They're not easy opponents by any means, but we know from last year where we stand and can use that going in."
Bayern and City will also have to negotiate tricky ties against Roma and CSKA Moscow if they are to progress.
In Group F, Zlatan Ibrahimovic will face two of his former clubs after Paris Saint-Germain was drawn alongside Barcelona and Ajax.
PSG, beaten in the round of 16 by Chelsea last season, will also have to take on Cypriot side Apoel Nicosia.
"These are games where every team has the right to dream," Barcelona's director of sport, former Spanish international keeper Andoni Zubizarreta, told the club website. "We have our dreams, and they all have their own."
It's a case of déjà vu for Arsenal and Borussia Dortmund after the two teams were drawn together for a third consecutive season.
Dortmund, which was narrowly beaten by Real Madrid in last year's quarterfinal, triumphed against Arsene Wenger's side in London but was topped at home by "the Gunners."
Turkish side Galatasaray, which reached the second round last time around, will also provide a stern test, with Belgian club Anderlecht completing the line-up.
Atletico Madrid, which lost last year's final in extra time, will face Italian champion Juventus, Olympiacos and Swedish side Malmo in Group A.
Juventus crashed out in the group stage last season.
Olympiacos was beaten by Manchester United in the last-16 during the previous edition while Malmo is making its first appearance in the group stage.
In Group C, Benfica, which has not won the competition since 1962, takes on Zenit Saint Petersburg, Bayer Leverkusen and Radamel Falcao's Monaco.
Chelsea, the 2012 champion, will be confident of making it through Group G after being drawn against Schalke, Sporting Lisbon and Slovenian champion Maribor.
Athletic Bilbao's reward for defeating Napoli in the playoff are games against Porto, Shakhtar Donetsk and BATE Borisov.
Champions League draw:
Group A: Atletico Madrid, Juventus, Olympiacos, Malmo
Group B: Real Madrid, Basel, Liverpool, Ludogorets
Group C: Benfica, Zenit, Bayer Leverkusen, Monaco
Group D: Arsenal, Borussia Dortmund, Galatasaray, Anderlecht
Group: E: Bayern Munich, Manchester City, CSKA Moscow, Roma
Group F: Barcelona, Paris Saint-Germain, Ajax, APOEL
Group G: Chelsea, Schalke, Sporting, Maribor
Group H: FC Porto, Shakhtar Donetsk, Athletic Bilbao, BATE Borisov