McClaren's side have already been beaten by Arsenal this season in a Champions League qualifier and will face another stiff test against Mark Hughes' men. Schalke, Paris St Germain and Racing Santander make up the group.
"It's a fantastic draw for the fans, for the club and for the players," McClaren told Sky Sports News.
"It's one of the toughest draws, but we've got a great draw and it's very exciting."
Asked for his reaction to coming up against City, McClaren added: "I've just come back to England to catch up on football here, and the signings Man City have made are massive and they are expected to do very well. It should be a fantastic occasion for us.
"We had a fantastic night last Thursday, beating Rennes (to reach the group phase). We've taken the club into an area they have never been before, and hopefully things can only get better.
"We weren't ready for Arsenal, that shows the gap. We are a young side, inexperienced, especially in Europe, but we will just enjoy it. It is about the future for these young players."