The 26-year-old winger was absent when the Eagles began their 2019-20 Premier League campaign with a goalless draw against Everton last Saturday.
The winger enjoyed some playing time during Crystal Palace's pre-season tour of Switzerland but suffered a slight setback during a friendly game against Bristol City on July 27.
After training with the rest of the first-team this week, Hodgson disclosed that the Ghanaian player is fit to play at Bramall Lane on Sunday.
Hodgson said "It is a fine piece of news, " It is good to have an extra player and it’s good to have a big squad, much better than it was in pre-season."
Schlupp won 2015-16 Premier League title with Leicester City before joining Crystal Palace in 2017.