The German has not lost a game to Everton since taking over at Liverpool in 2015, but believes their current boss Marco Silva has recruited well to assemble the strongest Everton squad since Klopp was appointed.
The arrivals of Brazilian winger Richarlison, Colombia international centre back Yerry Mina and French left back Lucas Digne have increased the quality at Everton's disposal and Liverpool's rivals are sixth in the table ahead of the game.
"The games have always been difficult but Everton are a different team now with a different style," Klopp told a news conference on Friday.
"It may not be too nice for all the other (Everton) managers but (Silva) has the best squad. That's how it is. They brought in players he wanted."
Liverpool, who are second in the table, two points behind leaders Manchester City, go into the match after a dispiriting 2-1 away defeat by Paris St Germain in the Champions League and Klopp called for a reaction against their local rivals.
"A reaction is always important -- we have to play better than we did in Paris," he said. "You can't always carry the last game into the next game.
"We didn't need a defeat in Paris to get us motivated for Everton. It's a special game... we need to work, we need to improve -- it's always like this."
Liverpool have had a mixed bag of a season so far, with a series of impressive performances in England offset by three dispiriting away results in Europe.
A strong defensive improvement, which has seen Klopp's men concede five goals in 13 league matches so far, has been tempered by a dampening down of the thrilling attacking play that was a hallmark of his team last season.
Much of the recent criticism of Liverpool has centred around a perceived lack of creativity in midfield, but Klopp bristled when asked if he was concerned by how his team were performing in the middle of the park.
"We have conceded five (Premier League) goals and (you say) our midfield is being overrun?" he said in response to a question. "I don't see that. Yes, we could have scored more goals, but I don't see any problems in midfield."
Skipper Jordan Henderson is suspended for the match and Klopp was asked if he was confident his team would be able to cope with the febrile derby atmosphere in the absence of their captain.
"He is not available, so what should I do? Ask the FA?" the German replied. "I really do not understand a lot of your questions today. Yes, my players are ready but they have to prove it on Sunday." (Reporting by Simon Jennings in Bengaluru Editing by Toby Davis)
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