Japan is currently out of the automatic qualifying spots and facing a battle to reach a sixth successive World Cup.
The Franco-Bosnian, whose position as head coach has been plunged into doubt after a disappointing 2018 qualifying campaign, has named a full-strength side for the November 15 clash in Saitama.
"Firstly, it's a six-pointer and we know we must win," said Halilhodzic, who will be desperate for victory after watching the Blue Samurai slip to third in their group in the final round of Asian 2018 qualifying.
"But we also know Saudi Arabia win a lot of free kicks and penalties. Fifty percent of their goals come that way -- they are specialists at provoking free kicks."
"We've been penalised a lot in our last few games and those penalties have cost us," he added. "I have to drill it into the players not to be so naive this time because this is a game we have to win."
Japan conceded a penalty in their shock 2-1 home defeat to UAE in September and another when they drew 1-1 with Asian Cup-holders Australia in Melbourne.
With Japan currently out of the automatic qualifying spots and facing a battle to reach a sixth successive World Cup, Halilhodzic knows another slip-up against the high-flying Saudis could cost him his job.
"Saudi Arabia are improving," said the firebrand former Algeria coach. "Arab sides are getting better technically and in all elements of the game. They have real quality so we need to be on our game."
Japan, who face Oman in a warm-up game in Kashima next Friday before tackling the Saudis, will be spearheaded by talismanic forward Keisuke Honda and playmaker Shinji Kagawa.
However, Halilhodzic must hope for an improvement on the recent form with a difficult run of games to come while rumours of a rift between the coach and his players have done little to help the team's flagging morale.
Japan trail Group B leaders Saudi Arabia, who have 10 points from four matches, and Australia, on eight points, with only the top two teams from the two groups qualifying automatically for the 2018 World Cup in Russia.
Goalkeepers -- Shusaku Nishikawa (Urawa), Eiji Kawashima (Metz), Masaaki Higashiguchi (Gamba Osaka)
Defenders -- Yuto Nagatomo (Inter Milan), Hiroki Sakai (Marseille), Gotoku Sakai (Hamburg), Tomoaki Makino (Urawa), Masato Morishige (Tokyo), Maya Yoshida (Southampton), Yuichi Maruyama (Tokyo), Naomichi Ueda (Kashima)
Midfielders -- Makoto Hasebe (Frankfurt), Hotaru Yamaguchi (Cerezo Osaka), Shinji Kagawa (Dortmund), Hiroshi Kiyotake (Sevilla), Ryota Nagaki (Kashima), Yosuke Ideguchi (Gamba Osaka), Yuki Kobayashi (Heerenveen)
Forwards -- Keisuke Honda (AC Milan), Shinji Okazaki (Leicester), Genki Haraguchi (Hertha), Takuma Asano (Stuttgart), Yuya Osako (Cologne), Manabu Saito (Yokohama), Yuya Kubo (Young Boys)