The Lega Serie A had banned them as punishment for their "geographically discriminatory chants" aimed at Napoli fans during last week's match between the sides.
Inter Milan appealed and a federal court ruled in their favour.
The successful appeal means Inter will have 8,000 supporters in the Curva Nord section of the stadium.
"I cannot imagine a derby without one of the Curve (North or south sections)," AC Milan goalkeeper Christian Abbiati said.
Inter go into the encounter hoping to give club president Erick Thohir his first Serie A win since taking over the club in November.
Last weekend's 4-2 defeat at Napoli dropped Inter to fifth in Serie A.
They are seven points behind Napoli, who are third and hold the last Champions League qualifying spot.
The Nerazzurri's last win dates back to November 9. Since then, they have collected three points from draws.
"This is one of the most important games of the year," Thohir said. "I can't wait for it.
"It would be fantastic to win the derby but we cannot underestimate Milan.
"I hope the team and the coach arrive prepared for the game."
Inter coach Walter Mazzarri will have to do without pivotal midfielder Ricky Alvarez through suspension.
Milan are in 10th place, nine points behind Sunday's rivals. They are riding a five-match unbeaten run in the league but have won just one of their last eight league games.
"We have worked really well in training and we are confident heading into the game," Abbiati said. "We hope Sunday's game can be a turning point for us and we can start climbing up in the standings."
Milan will not have captain Riccardo Montolivo, who must serve a one-match after being booked in Monday's 2-2 draw against Roma.
Brazilian midfielder Kaka will play in support of Alessandro Matri and Mario Balotelli in the Rossoneri attack.
Kaka goes into the contest having scored 99 goals for the club in his career.