He hasn't played since and missed the Autumn internationals and all five recent Championship Tests, with his last Wales involvement coming on the summer tour of Australia.
The 25-year-old was expected to return to the fold by the end of the month, with next Saturday's domestic derby with the Scarlets seen as the likely fixture for his comeback.
Dragons boss Darren Edwards appeared to rule the star blindside out of this weekend's trip to the Ospreys, instead stating that "He should be a definite for the week after next" at a press conference a couple of days ago.
But Edwards has since selected Lydiate in his starting line up for the evening kick off in Swansea as the 27-cap flanker gets set for his first appearance in sixth months and just his fifth game of the season.
Lydiate will start in the No6 shirt for the Dragons, with Lewis Evans wearing No8 after Toby Faletau was named on the bench.
Fellow Welsh star Andrew Coombs returns from international duty to start at lock for Edwards' men, while the Ospreys have named Championship winners Dan Biggar, Ryan Bevington, Richard Hibbard, Adam Jones, Alun Wyn Jones, Ian Evans and Justin Tipuric in their starting XV.
Scotland and Edinburgh flanker Ross Rennie will also return to action this weekend having not featured for club or country since November.
The 26-year-old specialist openside has been sidelined since sustaining a shoulder injury during Scotland's defeat to New Zealand in the autumn internationals.
Rennie hasn't played for Edinburgh since October but will start in the No7 shirt when they host Ulster at Murrayfield on Friday night.