The 23-year-old had been considered the man to beat in Pyeongchang until a hard fall in practice last November kept him off the ice for two "painful" months.
Hanyu said on Tuesday there are still jumps and moves he has not yet done in training but felt he could still win, depending on what he puts in his programme.
"I am confident that if I skate cleanly I will definitely win," Hanyu, 23, told a packed news conference at the Gangneung Ice Area after a practice session.
During a run through of his free skate to "Onmyoji" early on Tuesday, Hanyu was clearly taking it easy, although he did land a clean quad Salchow and quad toeloop. A token practice on Monday ended after about five minutes.
The pressure is on Hanyu to buck history. No-one has defended the men's singles figure skating gold since American Dick Button in 1952.
The fall while practicing a quad Lutz ahead of the NHK Trophy last November almost derailed Hanyu's plans.
He was ordered out of the tournament by his doctor, reportedly broke down in tears and then showed up on crutches for an interview, then disappeared from view.
"I thought of being shot up with painkillers and still taking part, but my ankle wouldn't move at all," Hanyu said on Tuesday. "It was way beyond painkillers."
In the crucial final run-up to the Olympics, when most athletes follow a carefully planned programme to get in peak condition, Hanyu was forced to "just sit and watch competitions" and could not step on the ice.
"That was really painful," he said.
"There were two months where I couldn't skate at all and that was tough. I actually did kind of wonder if it would get better."
During his exile, he said he practiced jumps as floor exercise and did a lot of image training, which he was able to put to use as soon as he went back to the rink.
"I'm still in the adjustment stage and there are a lot of jumps and elements I haven't done, but I'm moving little by little," he said.
"I have a plan and I'm going along with it to bring myself to peak condition at just the right time."
Hanyu said he resumed jumping triple Axels less than a month ago and quads, which are considered crucial in a programme to win an Olympic gold, only about two weeks ago.
He declined to say what will be part of a programme that will "let me skate cleanly" since it depended how far his training takes him before the men's competition starts on Friday with the short programme.
Asked if he felt these troubles had made him stronger, Hanyu said he would not go quite that far.
"I think there are things I learned and thoughts I had that I might not have if I hadn't had that break, so I don't think it was wasted time," he said.
"But it's really nice to appear here in front of everybody again. I hope to work hard and skate a dream programme in this place that is a dream for me."
(Adds dropped word in intro, no other change to text.)
(Editing by Greg Stutchbury)
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