Already looking like a potential title-decider, the meeting at the Etihad Stadium comes in a week when Premier League champions City finished bottom of their Champions League group and missed out on even second-tier Europa League football.
"Clearly this [European exit] can help us win the Premier League because we don't play in the Europa League but we tried to play in it and that was our tactic tonight," City boss Roberto Mancini said after Tuesday's loss at Borussia Dortmund.
Without European distractions, Mancini's squad, who remain the league's only unbeaten side, can focus on what most Blues fans believe is more important than continental glory - defeating United and beating them to the title once more.
Despite having lost three games, United hold a three-point lead over City with 36 points from 15 matches and the Manchester duo have been so dominant that they have pulled clear of Chelsea, Tottenham Hotspur and West Bromwich Albion (all on 26).
United manager Sir Alex Ferguson's main concern ahead of this season's first meeting with his cross-town rivals is his side's recent habit of producing comical and sloppy defending.
The Red Devils have conceded 32 goals in all competitions, making it their worst record at this stage of the year in more than a decade and also of particular concern having lost the title last year on goal difference.
Having leaked goals against City at Old Trafford last term in a 6-1 defeat and having also lost 1-0 at the Etihad to tilt the title race in their neighbours' favour, United are very aware how important it is to tighten things up for this fixture.
Ferguson was livid following last weekend's trip to Reading and likened his side's defensive performance in the 4-3 win to popular Scottish TV children's programme 'Cartoon Cavalcade'.
"We're getting punished for every ball that goes in the box at the moment but, saying that, we should still be defending far better," Ferguson told reporters.
"It is a worry. If we perform like that on Sunday, God knows what is going to happen to us."
Defender Nemanja Vidic, sidelined since September after undergoing knee surgery, is close to full fitness but Ferguson said he would not be considered for the derby.
However, Japan international Shinji Kagawa could make the bench to lift United whose second-string lost 1-0 at home to Cluj in the Champions League on Wednesday.
City's creative spark David Silva was not included for the trip to Germany, where City lost 1-0 to Dortmund, and could miss Sunday's game as he struggles with a hamstring injury, while Yaya Toure was serving a European suspension.
A midweek call-up saw centre-back Joleon Lescott join City's three-man defence alongside Vincent Kompany and Mancini will be hoping their partnership can quell the threat of the league's joint top scorer Robin van Persie, who has 10 goals.
Elsewhere, Swansea City striker Miguel Michu, another of the top scorers, can continue his sparkling run of form when Michael Laudrup'
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