Los Blancos beat Liverpool 1-0 in Paris in May to win their 14th European Cup.
The 2022 final was overshadowed by chaos outside the stadium and there was widespread criticism towards the treatment of fans at the hands of the French authorities deployed for the game in May.
Monday’s draw also pitted Paris Saint Germain and Bayern Munich against each other.
The Parisians finished second in their group behind Benfica after the final matchday and must now face the team that beat them in PSG’s only ever final appearance in 2020.
Elsewhere Antonio Conte will return to Italy to face AC Milan with his Tottenham Hotspur side while Chelsea will take on Borussia Dortmund.
Pep Guardiola will continue his pursuit of the Champions League trophy that has eluded him for 11 years as his Manchester City side face off against German’s RB Leipzig.
The draw is likely to please Real Madrid President Florentino Perez who recently complained about how infrequently top teams in football face each other and said midweek European competition should offer fans matches between “the strongest teams and with the best players in the world” throughout the year.
“If we look at the last Champions League finalists, Liverpool, a historic team with six European Cups, it turns out that we have played them only nine times in 67 years.”
If Real and Liverpool will play for a 10th time in 2023, the two teams have met twice in the final of the competition in the last five seasons with the Spanish side coming out on top both times.
Real also beat Liverpool over two legs in the 2020/21 season as well and have not lost a match to the Reds in their previous six meetings.
That last victory came in the round of 16 on a famous night at Anfield in in 2009 when Steven Gerrard and Fernando Torres inspired the home side to a 4-0 win.
Real will be favorites to reach the quarterfinals given’s Liverpool’s stuttering start to the season – Jurgen Klopp’s team is well off the pace in the Premier League title race – while the European Cup holder has won their Champions League group with ease and is already in control in La Liga.
The first legs are scheduled for 14/15/21/22 February, with the second legs on 7/8/14/15 March.
Champions League last-16 draw:
Paris Saint-Germain vs Bayern Munich
Inter Milan vs FC Porto
Borussia Dortmund vs Chelsea
Eintracht Frankfurt vs Napoli!
AC Milan vs Tottenham
Liverpool vs Real Madrid
Club Brugge vs Benfica
RB Leipzig vs Manchester City