Arsenal have missed Mustafi’s calming influence in defence, losing two of their last three games since the 24-year-old German, who is yet to taste defeat since joining the Gunners in August, limped off in the win over Stoke.
“Shkodran is back in normal training and he will be back in the squad,” manager Arsene Wenger told reporters.
Gibbs injured his knee in his second league start of the season in Monday’s win over West Bromwich Albion and Walcott remains sidelined with a calf problem.
Wenger also provided a positive update on striker Danny Welbeck’s return to fitness following a long-term injury.
“Welbeck is fit and sharp. He is in training and he looks quite good,” Wenger said.
Palace last week parted company with manager Alan Pardew and Wenger believes Sunday’s match will be more difficult now that former England boss Sam Allardyce is in charge.
“The level of confidence and urgency goes up when a new manager comes in and that makes the games more difficult,” Wenger said.
“They have experience and technical quality. They are a team that can be difficult for everybody.”
Despite a host of high-profile managers, including Pep Guardiola, Antonio Conte, Jose Mourinho and Juergen Klopp, plying their trade in England, Wenger has been disappointed by Premier League standards this season.
“It was a very promising championship with the best managers in the world competing and it promises to be an exceptional year but until now it’s been disappointing on all levels,” the Frenchman added.
“Because the Premier League has not produced the games that are remembered but in the second part I expect the level of the games will go up and we have a responsibility to do that.”
Arsenal will hope to continue their 22-year unbeaten home run against 17th-placed Palace on Sunday.