The England international striker had been sidelined with a hamstring injury, but made his return as a substitute in Monday's win over Queens Park Rangers.
Carroll makes only his second start for the Hammers against Arsenal, and Allardyce believes that his aerial presence will be crucial to unsettling the Gunners' backline.
Allardyce told ESPN: "Andy is chomping at the bit, it's a bit harsh on Carlton Cole but we feel he can cause Arsenal problems.
"He was superb here against Fulham here, and we need that, this is our biggest game of the season so far."
The Hammers are in a rich vein of form going into the London derby, with the promoted side unbeaten in their last four Premier League games.