The American duo have claimed five of the last six titles at Augusta and Mickelson readily accepts world number one Woods is probably the greatest player in history.
"I think it's a fun challenge to beat him," three-times major winner Mickelson told reporters on Tuesday during preparation for Thursday's opening round.
"He's most likely the best player the game has ever seen. It's been he and Jack (Nicklaus), and to be able to play against him in his prime is a great challenge.
"If I have a great rest of my career and go out and win 20 more tournaments and seven more majors to get to 50 wins and 10 majors, which would be an awesome career, I still won't get to where he's at today. So I don't try to compare myself against him."
Woods has already piled up 12 major titles with only Nicklaus, on 18, ahead of him.
"What I like to do is to try to win as many tournaments and as many majors that I can," Mickelson added.
"With him in the field, it just gives it more credibility, whatever it is I am able to accomplish."
The left-hander, who won his second green jacket at Augusta by two shots last year, is excited about his title defence at his favourite tournament.
"I love coming back here; it's a fun place to play golf," he said. "I love playing the Masters.
FAVOURITE EVENT
"It's my favourite event of the year and I'm going to work very hard this week to try to defend my title.
"I've played very well here in the past and it's certainly a course that I feel comfortable on," added Mickelson, who has produced top-10 finishes in his last 12 starts at Augusta.
"It's a course that I feel very good on, but so does Tiger. He plays this course very well and is very tough to beat out here."
Known for his meticulous approach to the majors, Mickelson plans to use two drivers in his bag for the second year in a row at Augusta, but with a slightly different strategy in mind.
His two-driver policy last year gave him the option to hit either controlled cuts or booming draws off the tee whereas his 2007 approach will mix versatility with raw power.
For shot variety, Mickelson has been successfully using a Callaway FT-5 driver while he expects to gain extra length with the new square-headed FT-i.
"The longer driver, the square one, goes 20 yards longer than my regular one," he said. "We've been working six months on this club for this tournament.
"So when I need distance, I use the square one and when I try to hit little low shots or work it around the trees on 10 or 13, I'll use the regular-shaped driver."
Mickelson, who won his first major title at the 2004 Masters, is scheduled to tee off with Australia's Adam Scott and U.S. amateur champion Richie Ramsay at 1056 local (1456 GMT) in Thursday's opening round.
