The sides drew 2-2 at Oriel Park on the opening night of the season, while Dundalk recorded a 2-1 victory at the Brandywell in May.
City boss Ruaidhri Higgins is expecting a tough game as the second and third placed teams in the Premier Division table lock horns at Oriel Park.
Derry have returned to form as their injury woes wain, and with the addition of new players, but Higgins is wary of the Lilywhites.
He said: “We’re coming up against a team that has a string of players who have won leagues and cups throughout their careers.
“They have some quality young players too, hungry for success and it’s a good mix.
“I’ve said all along that they won’t be far away come the end of the season and nothing has changed my mind since.
“We’ve improved ourselves in recent weeks- winning three and drawing two of our last five league games prior to Saturday’s cup win.
“I’m delighted with the business we’ve done in the transfer window and we’re looking forward to the rest of the season.
“I’d imagine it will be a decent contest because neither of these sides will be looking to park the bus.
“There won’t be much in it but we’ll be approaching the match as we do with any other, trying to win it.”
Ryan Graydon is set to miss out having come off injured against Oliver Bond Celtic.
Will Patching is doubtful having missed the last few matches as well.
“There will obviously be a lot of focus on the lads in the Derry team who are coming back to Oriel Park,” Lilywhites boss Stephen O’Donnell told the club website.
“A lot of them had a good history with Dundalk. They are all good lads, I know most of them, and they were excellent for Dundalk.
“They’ll be looking forward to coming back and we look forward to welcoming them back but our crew here at the minute have been brilliant and we’re forming a new team, a new squad, and a new identity and, hopefully, in years to come we’ll be talking all about this current crop.
“We have already enjoyed some good memories this season. We have won 10 on the bounce at home and the players that we have now have been brilliant.
“Some of them have been here for a longer period of time but in the main, we have new players who we believe can establish themselves as firm favourites and really good Dundalk players in their own right from here on in.”Tags: