The Premier League leader has won its opening two group games and takes on last year's beaten finalist, which will be without Jurgen Klopp on the touchline as he serves a ban.
Arsene Wenger's side has enjoyed a fine start to its European campaign, with a 2-1 win away at Marseille being followed up by a 2-0 success at home against Napoli.
Last year's runner-up Dortmund, meanwhile, went down 2-1 in Naples on the first matchday, before responding with a 3-0 triumph over Marseille, although the team will be without coach Jurgen Klopp for Tuesday's game as he serves the second of his two-match touchline ban.
The home side comes into the game in fine form domestically and is currently top of the Premier League, having taken 19 points from seven matches since an opening day defeat at home to Aston Villa.
Klopp's side has been in similarly impressive early season form in the Bundesliga, having won seven and drawn one of its opening nine Bundesliga games, with just a 2-0 loss at Borussia Monchengladbach blighting the record.
The two sides last met at the same stage two years ago, when they shared a 1-1 draw in Germany before two Robin van Persie goals gave Arsenal a 2-1 win at the Emirates Stadium.
Arsenal's home record against German sides is strong, with Wenger's side winning nine and losing just three of the past 13 fixtures, although the club did taste defeat at home to Bundesliga outfits twice last season, 2-0 to Schalke in the group stage and 3-1 to eventual winner Bayern Munich in the second round.
Dortmund, winner of the competition in 1997, returns to the city where it lost the final last year, and the last time the club took on English opposition it drew 1-1 with Manchester City in the group stage on the way to that final appearance.
Arsenal could be boosted by the inclusion of midfielder Santi Cazorla, who made his return from injury in the weekend Premier League win over Norwich after an ankle problem, while fullback Bacary Sagna has also overcome a hamstring complaint picked up in the win over Napoli - although Wenger faces a selection dilemma over whether to risk both for a second game in quick succession.
The quartet of Theo Walcott (abdomen), Abou Diaby (knee), Lukas Podolski (hamstring) and Alex Oxlade-Chamberlain (knee) are all long-term absentees and are unlikely to feature.
For Dortmund, goalkeeper Roman Weidenfeller is available again after serving a one-game suspension for a red card picked up in the defeat to Napoli, while Lukasz Piszczek (hip) and Ilkay Gundogan (spine) remain long-term injury worries.
Marcel Schmelzer (thigh) and Sebastian Kehl (ankle) have not played since September, although the former was on the bench for the 1-0 win over Hannover on Saturday.
Sven Bender (groin) and Jonas Hofmann (knee) also both featured in that game, although both have been carrying knocks so may not be risked.
Marco Reus (ankle) came through the weekend win by scoring the winner and should play some part.