A rare goal from John Obi Mikel on the stroke of half-time to cancel out Zlatan Ibrahimovic's opener was not enough as Edinson Cavani struck a late winner just four minutes after coming off the bench to consign Guus Hiddink's side to defeat.
However, Chelsea will take a potentially crucial away goal back to Stamford Bridge for the second leg, and Ballack insists that he saw enough from the visitors to have reason to be positive.
"It was a fair result," he told BT Sport. "Chelsea put in a great effort, they had a great fight. I didn't expect them [to be] that good to be honest, but they have to do it again at home, don't step back.
You could see there were some really good moments when they passed the ball around and you think the confidence comes back, the old Chelsea comes back [but] in some parts of the game the confidence over 90 minutes is still not there because they always carry this Premier League season with themselves.
"The same performance, and I think they have a good chance to win. They were a bit disappointed, which they don't have to be after that result, especially after the performance. It should give them confidence and hopefully they can repeat this performance at home."
The result means that if Chelsea beat PSG without conceding or by two clear goals they will progress to the quarter-finals of the Champions League for the tenth time in the 13 seasons that they have taken part in the competition.
Hiddink and his players will be desperate to overcome the first leg deficit and enjoy a prolonged European campaign to serve as something of a tonic for their miserable Premier League campaign.
Despite showing signs of a resurgence under Hiddink, going unbeaten in their previous 11 matches under the Dutchman before Tuesday's defeat. Chelsea are still three points away from a top-half position in the league.