The Argentine, who joined City from Malaga in the summer, says the reported problems at the Catalan club after the Christmas break, including an alleged bust-up between coach Luis Enrique and Lionel Messi, have given the City players confidence.
“I think we have (lost any fear), especially as a result of what happened at Barcelona this winter that everyone is talking about in Spain,” Caballero told Spanish newspaper Marca.
“They are not as strong a side as in recent years. That is going to help us and make us feel stronger.”
City were knocked out of the Champions League by Barca last season and will again start the last-16 tie as underdogs.
But Caballero hopes their off-the-pitch issues, such as the sacking of sports director Andoni Zubizarreta last month and the decision to bring presidential elections forward, will adversely affect the Catalans.
“These club problems can also help us although you win games on the pitch and we need to concern ourselves about that,” he added.
City have never progressed beyond the last 16 of the Champions League and were beaten 3-2 on aggregate at the same stage by Barca last year.
However, Caballero says the Premier League champions have learnt from the experience and will be better prepared for the first leg in Manchester later this month.
“I think City learnt from that game and are now better prepared,” he said. “We cannot make the same kinds of mistakes because a club like Barcelona will punish you. We need to be at 100 percent for the two matches.
“Last season we ended up as (Premier League) champions and without doubt the blow of being knocked out by Barca motivated us to finish the season in the best possible way.
“We are now playing well, high up in the Premier League and improving all the time. In the Champions League it was an important bonus for us to qualify for the next round when we looked as though we were out with two or three games to go.???