The chase for Carlos Tevez, with both clubs trying to capture the outcast Manchester City forward, will add extra spice to the clash at San Siro where AC Milan coach Allegri defends a 100 percent record against his neighbours.
Inter, eight points behind Serie A joint leaders Milan and Juventus, have leapt up the table to fifth after winning five matches in a row since the start of December and conceding only one goal in the process.
Their form is a remarkable turnaround for former Chelsea, Juventus and Roma coach Ranieri, after Inter managed only one win in their opening nine Serie A games of the season.
"We don't need this match to know how much he is worth as a coach," said Milan midfielder Gennaro Gattuso.
"He's a coach with great experience and understands everything.
"He's a cunning old fox and we need to be very attentive to him and Inter."
However, Milan's form has been even more impressive with 10 wins and two draws since their only Serie A defeat of the season to Juventus on October 2.
Milan have been involved in a long chase for Tevez, who has not played for City since refusing to warm up in a Champions League match at Bayern Munich in September.
But their pursuit appears to have hit a brick wall as City have ruled out a loan deal which is favoured by Milan, while Inter president Massimo Moratti confirmed his club's interest in the Argentine on Monday.
Meanwhile, Milan forward Alexandre Pato is the subject of speculation over a possible move to big-spending Paris Saint-Germain.
Italian media are suggesting he could be left out of Sunday's match with fellow Brazilian Robinho - who has captured the attention with some glaring misses this season - partnering Zlatan Ibrahimovic in attack.
Allegri, who won the Serie A title in his first season with Milan last term, has a 100 percent record in three outings against Inter, who in contrast have been through a turbulent last 18 months.
His debut produced a 1-0 win which hastened the end of Rafael Benitez's unhappy six months in charge of Inter.
Benitez was replaced by Brazilian Leonardo who sparked an Inter revival but their title challenge was effectively ended by a 3-0 defeat in the second derby of last season.
Leonardo quit in the summer and was replaced by Gian Pieri Gasperini whose disastrous five-match reign kicked off with a 2-1 defeat to Milan in the pre-season Super Cup match, played in Beijing.
The weekend will also see former Italy coach Roberto Donadoni, sacked by Cagliari just before the start of the season, make his debut in the hot seat at Parma.
Donadoni has replaced Franco Colomba, who became the eleventh Serie A coaching victim of the season following last weekend's 5-0 defeat at Ranieri's resurgent Inter.
Meanwhile, Juventus, still unbeaten after 17 games, have an excellent chance to take advantage of any Mi
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