Two of the tournament's most decorated clubs, with 15 titles between them, were pulled out together in Group B at the draw in Monaco.
Swiss champions Basel and Bulgaria's Ludogorets Razgrad, who qualified for the group stage for the first time thanks to two shoot-out saves from emergency goalkeeper Cosmin Moti, are the other teams in the group.
England's other three representatives, meanwhile, will all meet the same German opposition as last year.
Manchester City and Bayern Munich make up Group E with CSKA Moscow and Roma, while Chelsea join Schalke, Sporting Lisbon and Maribor of Slovenia in Group G.
Arsenal are again drawn with Borussia Dortmund, with Galatasaray and Belgium's Anderlecht completing Group D.
Liverpool chief executive Ian Ayre admitted that he was particularly looking forward to the two games against Real Madrid.
He told Sky Sports News HQ: “I am pleased. They are all tough groups but it is particularly special to have Real Madrid in the group.
“We respect everyone but obviously have some great memories of games against Real Madrid, so I think it makes for a great competition for us.”
Responding to Man City’s draw, their director of football Txiki Begiristain said: “It’s a very, very, tough group. They are very strong teams.
When asked if he felt City had the hardest group, he replied: “I think so. It’s spectacular all the clubs try to play good football. It will be an amazing group.”
Group A: Atletico Madrid, Juventus, Olympiakos, Malmo
Group B: Real Madrid, Basel, LIVERPOOL, Ludogorets
Group C: Benfica, Zenit St Petersburg, Bayer Leverkusen, Monaco
Group D: ARSENAL, Borussia Dortmund, Galatasaray, Anderlecht
Group E: Bayern Munich, MANCHESTER CITY, CSKA Moscow, Roma
Group F: Barcelona, PSG, Ajax, APOEL
Group G: CHELSEA, Schalke, Sporting Lisbon, Maribor
Group H: Porto, Shakhtar Donetsk, Athletic Bilbao, BATE Borisov
@hump3, don't mention wheat! I've just been diagnosed with coeliac disease just the sight of the word 'wheat' makes me ill. To be fair we have never lost to Real Madrid in the European Cup/Champions League and in fact have always beaten them. We could be their bogey team. But I expect this time to be different unless our back 4 is solid by the time we face them and we have solved our defensive frailties. So looking forward to Champions League nights again.- lfcfan80