The three-time winners face the North Africans on in the World Cup Round of 16 on Monday.
Algeria advanced to the knockout stages from Group H with four points. After losing their opening game 2-1 to Belgium, they went on to beat South Korea 4-2 and played out a 1-1 draw with Russia to seal their place in the last 16.
Although Germany will be overwhelming favourites in the clash Lahm insists his side must be at their best to overcome Algeria, even though he admits he could not name many of their players.
"OK, I wouldn't know the names of players and where they play, but I know one or two I would pronounce wrongly," the Bayern star said. "But let me tell you that we definitely have studied our opponents, we have had video analysis.
"We know what is in store for us. I know this is a team that's certainly shown that they are deservedly in the Round of 16," he added. "They defend together, it is a team that does not want to concede a goal. They don't want to lose one single duel, they prefer to foul than lose the ball."
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Lahm has been in excellent form for Germany in the World Cup so far. Assuming the holding role that he excelled in last season with Bayern, he is a steady presence in midfield and is crucial to how far Germany will go in this tournament.
After making the transition from his former role as a right-back, he trails only Toni Kroos in touches and passes for his side in this tournament.
Germany are among the favourites to win the World Cup this year after a near-perfect group stage. They crushed Portugal in their opener before they drew 2-2 in a pulsating clash with Ghana. They rounded off Group G with a 1-0 win over the USA to finish atop the group.
A win against Algeria would set up a quarter-final clash with either France or Nigeria.