Sunday's mouthwatering encounter will be the first Chelsea match Ranieri has attended since being replaced by Jose Mourinho in June despite leading them to second in the Premier League and the semi-finals of the Champions League last season.
The Valencia coach will be working for Italian television at Highbury, where his Chelsea side beat Arsenal 2-1 last April to end their Champions League hopes in the quarter-final.
"Chelsea must be one of the favourites for the Champions League because Mourinho has won it before and my players had a good experience last year," the affable Italian was quoted as saying by the London Evening Standard on Thursday.
"Chelsea are very strong. We did a very good job last year putting the foundations in place and they're continuing to progress. I believe they will win the Premiership this season."
Ranieri wants to keep a low profile on his return to England.
NO CONTACT
"I've had no contact since I left the club and am a very reserved man. I don't want to disturb anybody and will just watch the match and see some old friends," said the Italian.
Arsenal midfielder Fredrik Ljungberg missed Tuesday's 5-1 win over Rosenborg which put Arsene Wenger's side into the last 16 of the Champions League with a migraine and is a doubt as the champions try to close the five point gap on leaders Chelsea.
Arsenal are already without injured midfielders Edu and Gilberto Silva, while captain Patrick Vieira is suspended.
Right back Lauren should return while the only other change could see German Jens Lehmann reclaim his place in goal.
Wenger has preferred Spanish keeper Manuel Almunia for the past three games but he has looked shaky, failing to deal with a free kick for Rosenborg's goal and gifting Manchester United their winning strike in a League Cup defeat last week.
The 27-year-old Almunia, signed from Celta Vigo in July, told Arsenal's website: "I was a little surprised when I was chosen to play in last few games but I am not worried and I don't feel the pressure.
"I'll be confident if the manager picks me for Sunday. I am experienced and I want people to talk about the good things I have done."
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