Bayern beat Arsenal at the same stage of the competition last season, outclassing the Gunners 3-1 at the Emirates Stadium before surviving a scare in the second-leg in Munich to advance on the away goals rule.
“They are the strongest team we could have drawn and it’s certainly not what we were hoping for,” Bayern captain Philipp Lahm said.
“Arsenal have made some quality new signings and will prove a real challenge for us. However, our goal is obviously to reach the next round.”
Those sentiments were echoed by team-mate Jerome Boateng.
He said: “Arsenal are the toughest team we could have drawn. They will be highly motivated after we knocked them out last season. We are expecting two very intense games.”
Arsenal secretary David Miles admitted the Gunners had paid a heavy price for finishing second in their group but is confident they can overcome Pep Guardiola’s men.
“I think we have paid the price. We would much rather be in the other half of the draw but we are where we are and I’m looking forward to these two matches.
“We’re optimistic, we ran them very close last year,” he added. “Don’t forget we only lost on away goals. We’re hopeful we can come through this one.”
The tie of the round sees Manchester City take on Barcelona and Barca coach Gerardo Martino is acutely aware of the threat Manuel Pellegrini’s men pose.
The Catalan giants are leading the Primera Division and scoring freely despite the absence of star striker Lionel Messi but Manuel Pellegrini’s men are in particularly formidable form in the Premier League having recently put seven goals past Norwich, six past Tottenham and six past Arsenal.
Martino said: “They are scoring goals freely and I don’t want to experience that first hand.
“They are an important rival and have very good players.
“You hope for the best during the draw and then you just have to deal with what comes out of it.
“Maybe the other side didn’t want to be drawn against Barca.”
Chelsea will face Didier Drogba for the first time since the Ivorian striker left Stamford Bridge after eight years in 2012.
Drogba said he was relishing his reunion with his former employers, having scored the equaliser and then the winning penalty against Bayern Munich to win the competition in 2012.
“What a draw... I’m the luckiest man in this competition,” he said on his official Instagram account. “In both games I’ll be playing home! See you in (a) few months.”
Chelsea midfielder Juan Mata said it would be a fond reunion for all concerned.
He said: “Didier was a legend here. I guess that he would be very excited about coming back.”
Unlike Arsenal and Manchester City, Manchester United received a kinder draw and will be strong favourites to overcome Greek side Olympiakos.
John Alexander, Manchester United’s club secretary, said the Premier League champions’ straightforward draw highlighted how important it had been to win their group.
He said: “If you look at the ties Arsenal and City got, that shows why you have got to win the group. Whoever came out of the pot would have been a good one to draw. United are a big club in Greece so we will have a good following over there.”
Elsewhere, the last-16 draw pitted Real Madrid against Schalke, last year’s runners up Borussia Dortmund take on Zenit St Petersburg, AC Milan will play in-form Spanish side Atletico Madrid while Bayer Leverkusen face the big-spending Paris Saint-Germain.