The Lions have been buoyed by their impressive two-point win over Richmond in last week's knockout final.
The defending premiers at the MCG on Friday night loom as a tougher proposition, considering the two hidings the Demons dished out to the Lions in the regular season, including a 58-point touch-up three weeks ago.
"The bottom line against Melbourne is that we have played with unacceptable effort and attitude and we have to change that around," Fagan said.
"There is nothing else to talk about. Mindset is a key thing in every game, particularly in finals.
"Melbourne are the only team this year that have caused us some problems. We've recognised that and we have got to change that.
"What hopefully you will see is a much better effort than what we have produced the last couple of times we've played them.
"I feel confident in our group. Last week was a tremendous win and gave us a fair bit of belief.
"We have won five of our last seven games so our form is not too bad, other than the Melbourne loss."
Fagan was giving nothing away on the makeup of his side but has Cam Rayner and Noah Answerth available again after serving suspensions last week.
Oscar McInerney is out with concussion. Fagan addressed whether ruckman Darcy Fort would come in.
"One of the reasons we brought Darcy to the club was because we thought Oscar needed some back-up, and as it has turned out we've needed that in a final. It is good to have him," Fagan said.
"Oscar missed a game against the Giants a few weeks back with COVID and Darcy came in and was one of our best players. We have a lot of faith and trust in him."
Fagan said that when Melbourne lost last week to Sydney, setting up Friday's clash with the Lions, he saw it as "a great opportunity" rather than a here-we-go-again scenario.
"If you want to be the best you've got to beat the best," he said.
"We haven't beaten them the last four times, but prior to that we did beat them. The good thing is that we played them a couple of weeks ago and we learnt a lot.
"We had similar experiences against Richmond. I think they won 15 in a row, which is more than four in a row. We had to find a way to overcome how they went about things.
"I don't see this is any different as a task. We have to be as strong mentally as they are."
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