The British & Irish Lions lock, an inspirational figure for the Irish, suffered an AC joint separation against France nearly four weeks ago and missed the 31-5 demolition of Wales.
He was withdrawn early from training on Tuesday as a precautionary measure and was given the all clear by Ireland's medical team on Thursday.
Donncha O'Callaghan has paid the price for his Munster team-mate's return and must settle for a place on the bench for the clash with Frank Hadden's side.
O'Sullivan faced a tough call in deciding who to drop out of O'Callaghan and Malcolm O'Kelly, given the duo's performances against Wales, but the Leinster veteran has been given the nod.
Mick O'Driscoll, who featured on the bench against last season's Grand Slam champions, drops out of the squad altogether.
Victory in Dublin on Saturday would set up a potential Six Nations decider against England eight days later, while Scotland need a win to keep their title hopes alive.
O'Connell was Ireland's player of the Six Nations until injury ruled him out against Wales and his presence is vital if the rejuvenated Scots are to be beaten.