City reached the last eight of the Champions League for the first time in their history as they overcame Ukrainian side Dynamo Kiev 3-1 on aggregate in the previous round.
Their reward for success is a two-legged tie against Chelsea’s conquerors PSG, a team who are ever-improving under Laurent Blanc and are now among the favourites to win the title.
Assessing the draw, Henry said that City will have to be at their very best to stand a chance of progression as he backed the Ligue 1 champions to edge through.
"It's a difficult draw for Man City. Paris Saint-Germain are a solid team and they've done very well over the past three years,” Henry told Sky Sports.
"They have been coming slowly but surely, and they're getting stronger and stronger. We are going to see Zlatan [Ibrahimovic] again in England, and I think PSG are going to edge it.
"It's going to be a very, very difficult one and who knows what can happen but they are a team that I think can win the Champions League.”
While City have been struggling in the Premier League and currently find themselves 12 points behind league leaders Leicester City, the same can’t be said of PSG, who wrapped up the title last weekend with an incredible 9-0 win over Troyes.
The side from the French capital have grown in to a world-class team over the past few years, but one possible weakness is the standard of the French league and how they raise their intensity in Europe.
Zlatan Ibrahimovic and Edinson Cavani are two obvious threats, but stopping Marco Verratti and Blaise Matuidi in midfield will be key for City with the latter a vastly underrated player.