Mikel Arteta's side head to the Etihad six points clear at the top, albeit having played a game more, with the fixture shaping as a potential title-defining moment in the closing weeks of the season.
Rice did not shy away from recent shortcomings, admitting Arsenal's performances have dipped during a mixed run of results despite securing a place in the Champions League semi-finals after a 0-0 draw with Sporting Lisbon.
"There's no beating around the bush - we have to perform better," he said. "Recently, we've probably made too many errors… it's about doing the basics better."
Arsenal have won just once in their last five matches and were beaten by City in last month's Carabao Cup final - a result that still lingers with the squad.
"It hurts losing every final," Rice added. "To see them lift that, it did hurt. There is that fire in the stomach to eradicate that this weekend."
Despite those struggles, Arsenal remain firmly in the title race and are also preparing for a Champions League semi-final against Atletico Madrid. Rice believes the trip to City offers the perfect stage to respond.
"The Etihad is the ultimate test - but it's why we play this game," he said. "To go there and win would be a massive statement."
The England international, who overcame illness to feature against Sporting, also stressed the importance of composure on the ball, with Arsenal having scored just three goals in their last five games.
"It's about confidence - taking more touches, relaxing, not feeling under pressure," he said.
With key players still sidelined, Rice has stepped into a leadership role and insists the squad understands what is required in the run-in.
"These are the games you dream of," he said. "We spoke as a group. We know what's needed - now it's about delivering."
Roberto De Zerbi has called on his players to show character and unity as Tottenham prepare to face Brighton today, admitting the loss of key defender Cristian Romero for the rest of the season has been a major setback.
Michael Carrick has insisted his Manchester United side were ready for a "proper game" against Chelsea, as the race for UEFA Champions League places intensified ahead of their clash at Stamford Bridge today.
Jarell Quansah has admitted he had "started to love football again" after making a fresh start with Bayer Leverkusen in the Bundesliga.
Arne Slot has insisted the Merseyside derby remains "a very special game" as Liverpool prepare to face Everton in their latest Premier League meeting.
