Neither side has ever progressed beyond the last 16, but Okada - who was widely ridiculed before the finals for predicting they would reach the semi-finals - believes that while Paraguay are strong defensively and may possess more individually skilful players the Japanese could still prevail.
Okada, who took over the reigns in late 2007, has regained credibility after Japan qualified for the second round against all expectations with wins over Cameroon and Denmark and were only beaten 1-0 by the heavily-fancied Dutch.
"Honestly speaking, we trail the rest of the world in many senses in the footballing arena," said Okada, whose side came into the finals on the back of four straight defeats in pre-World Cup friendlies, scoring only one goal. "But our great strength is we play as a unit. We have proved that football is a team sport."
The Japanese players main concern was how they could breach the Paraguay defence, which conceded just one goal in its three group matches, the 1-1 draw with Italy, as they finished top of the table.
Defensive midfielder Yuki Abe, who has played the full 90 minutes against Cameroon, the Netherlands and Denmark in Group E, pinpointed the Paraguayan defence as being its bedrock. "Their defence is compactly organised. They have physical strength but are also good on the ball. I think they will be difficult opponents," said the Urawa Reds utility player.
Abe is one of 12 players in Japan's FIFA World Cup squad, who already have experience of playing Paraguay - in a goalless draw in May 2008. In their six encounters, Paraguay have won two, Japan have won once and the other three have been draws.
Former Mallorca forward Yoshito Okubo, another to have played in the friendly, conceded that the Paraguayans were a streetwise team. "Paraguay are very strong," he said. "They are passionate and experienced. I think it's going to be tough."
Brazilian-born centre back Marcus Tulio Tanaka said he had not wanted to face a South American side in the second round. "They are skilled in do-or-die games," said the 29-year-old, a third-generation Japanese-Brazilian, playing in his first World Cup. But as I always say we are challengers who have nothing to lose."