The Foxes have had a superb first half of the campaign and will have the chance to end 2015 top of the pile with a win over City after Arsenal knocked them into second place with their victory over Bournemouth on Monday.
Pressure will only increase as the second half of the season begins to tick down and Ranieri is keen to avoid a repeat of what he saw at Liverpool on Boxing Day, where his side were over-anxious.
"You know my idea about this (the title) - we are dreaming," said Ranieri.
"We are in good condition and in a good position with 38 points.
"Now we can continue, but I want to see my players enjoy it. I don't know why we were so nervous at the beginning. Why?
"Play football, don't worry. If you lose, lose. That's it. We have the time."
Despite Ranieri's assertions, City boss Manuel Pellegrini is convinced Leicester have what it takes to stay the course in the title race.
Pellegrini has warned his players they must approach Tuesday's trip to the King Power Stadium as they would any other top-of-the-table showdown.
The Foxes' loss at Liverpool was only their second defeat of a campaign in which City have already been beaten five times and Pellegrini does not believe one bad result will prompt a slump.
Pellegrini, whose side moved within three points of Leicester by thrashing Sunderland 4-1 on Saturday, said: "Before that they beat Chelsea and drew against (Manchester) United.
"We must consider Leicester not thinking that they lost on Saturday and could collapse, but as a team that will have options to be fighting for the title until the end. With that mentality we must try to play the game.
"They are top of the table because they deserve to be. They have important players in a very good moment with high performance."