Roberto Mancini’s expensively-assembled squad slipped to a 2-1 defeat to the Italians on Tuesday night and face dropping into the Europa League unless results go their way next month.
The England international confessed the club are still learning the rigours of the Champions League, but insists they won’t be carrying any European hangover into their Premier League fixture on Sunday.
"We're a strong group of players, mentally as well. We still have confidence in ourselves. This is a massive disappointment but it's all part of football," said Milner.
"You have to deal with disappointments, move on from them and make sure you learn from your mistakes.
"That makes you a stronger and better team. It's a learning curve for us. We have to make sure we bounce back from this but learn from it also.
"We're disappointed but we will pick ourselves up and go again on Sunday at Anfield and make sure we bounce back with a good performance and get a win."
City could potentially find themselves eight points clear of second-placed Manchester United on Sunday evening if their rivals slip up against Newcastle United on Saturday evening.
But the 25-year-old insists his team-mates are only focused on securing a further three points as they continue their quest for Premier League dominance.
"We're not really worried about what other teams are thinking. We've got some big games coming up and it's going to be massive on Sunday," Milner added.
"That's the pleasing thing - and we've got games every few days.
"We don't have an international break to think about the defeat, we're straight back at it and hopefully we can bounce back with a victory."
