Greig Oliver's hosts will be all out to end their winless streak in the 2007 tournament - they have suffered defeats at the hands of England (31-5), Wales (56-8) and Italy (27-10).
The Irish have posted wins over Wales (17-15), France (19-16) and England (13-6) to date.
Assessing tonight's game, McFarland said: "We have seen Scotland play and while they have not enjoyed the results they would have wished for so far, they are a strong side.
"We aren't getting ahead of ourselves and I am confident of what we can do in every game. But we will have to be at our best to win it."
Assisting Eric Elwood in his first season with an international side, McFarland said that being involved with a team on the international stage is "unique."
"It's different to coaching at the other levels in which I've been involved - in that every member of our squad has a part to play, whether they are in the action for one minute or for the full eighty.
"There is a great team spirit and a tremendous amount of talent in the squad, and in the captain David Pollock, they have not only an outstanding individual player but also an excellent leader."
Urging Irish supporters who are in Scotland ahead of the senior game to get to Falkirk tonight and cheer on the Under-20s, McFarland added: "Falkirk is only a 30-minute journey by train from Edinburgh so we're hoping for a good turnout of Irish fans."
The U-20 squad trained at the Falkirk stadium in wet and windy conditions on Thursday but have settled in well.
"The Scottish are very hospitable and all the guys are now really looking forward to the game," confirmed McFarland who also has duties as the Connacht senior team's video analyst and as coach to Connacht Junior League side Monivea this season.