McLeish is aware that expectation levels have risen amongst supporters after Blues finished ninth last season.
But he has echoed the thoughts of former City manager Trevor Francis, who feels a top-six berth is an unrealistic aspiration.
McLeish said: "It is ludicrous to suggest that. It is incredible that some people think that.
"But my experiences in the game tell me it is nigh on impossible.
"We can all dream and have ambition but there are about eight teams in there who, over a length of the season, will always come to the fore.
"Then the rest are fighting for the other places.
"If we come ninth again, it will be phenomenal.
"I would judge that even better than last season. Finishing in the top 17 is our priority again."
Meanwhile McLeish has challenged Birmingham's fringe players to show they are worthy of being amongst his first-choice selections in tonight's home Carling Cup clash with MK Dons.
"The guys playing tonight have got to show what they can do and put pressure on the ones who started at the weekend," he said.
"They've got to say 'I'll show the manager I'm worthy of a first-team place'.
"The gauntlet is being thrown down to these guys to show what they can do."