The 30-year-old has been struggling with a groin injury but could be back in the squad in time for the Everton match at Selhurst Park on November 9.
"Paddy is well on the way to getting back," Holloway told South London Press. "I hope he will be ready in about three weeks.
"It was always going to be a gamble including him in our 25, as to whether he would be ready or not before January, but whether or not he is fit, we need his type of people.
"His attitude has been sensational. He always believes we are going to get better and stronger. He has had a couple of breakdowns in training, and now I hope there won't be any more."
McCarthy joined the Eagles from Charlton Athletic in 2008.